Reference no: EM132561897
Question - Last year Martin Motors reported the following income statement:
Sales $4,000,000
Cost of goods sold 2,400,000
EBITDA $1,600,000
Depreciation 500,000
Operating income (EBIT) $1,100,000
Interest expense 300,000
Taxable income (EBT) $800,000
Taxes (40%) 320,000
Net income $480,000
The company's CEO, Joe Lawrence, was unhappy with the ?rm's performance. This year, he would like to see net income $1,440,000. Depreciation, interest expense, and the tax rate will all remain constant, and the cost of goods Sold will also remain at 60 % of sales.
a) How much sales revenue must the company generate to achieve the CEO's net income target?
b) Calculate the cost of goods sold for Ahmed & Co. using the following data: Inventory turnover = 4.2; Current ratio = 2.3; Quick ratio = 1.1; Gross Profit Margin = 30% and CL of $270,000.