If sales increase by 30 change in earnings before

Reference no: EM13476434

You have developed the following pro forma income statement. It represents the most recent years operations. The company controller wants answers to the following questions

Pro forma income statement

Sales 45,728,000

Variable costs (22,758,000)

_____________

Revenue before fixed costs 22,970,000

Fixed costs (9,110,000)

____________

EBIT 13,860,000

Interest Expense (1,345,000)

_____________

Earnings before taxes 12,515,000

Taxes(50%) 6,257,000

______________

Net Income 6,257,000

a) If sales increase by 30% , the % change in earnings before interest and taxes equals____% , the % change in net income equals____%

b) If sales decrease by 30% , the % change in earnings before interest and taxes equals____% , the % change in net income equals____%

c) If firm were to reduce its reliance on debt financing such that interest expense were cut in half, how would this affect your answers to part a and b.

Reference no: EM13476434

Questions Cloud

Recall a time in which product packaging positively : product packagingrecall a time in which product packaging positively influenced your purchase decision and discuss the

There are 3 topics to this assignment 1 push-pull marketing : there are 3 topics to this assignment 1 push-pull marketing 2 product advertising and 3 sales promotions.part 1 - the

Subjects for paper will be assigned from the textfrom : subjects for paper will be assigned from the textfrom selected newspaper or other periodical articles or from other

In this assignments there are three topics to this : in this assignments there are 3 topics to this assignment 1 segmenting the market 2 differentiating a productservice

If sales increase by 30 change in earnings before : you have developed the following pro forma income statement. it represents the most recent years operations. the

Beginning college can be exciting yet challengingour : write five supporting details for each topic sentence.1. insert your favorite holiday is my favorite

Dscribe how you might handle the situation and why the : describe how you might handle the situation and why the approach you suggest is the right one to take. apply

Market research is often used to specific decisions about : 1.market research is often used to specific decisions about aspect of the marketing mix. discuss and provide examples

John college strives to create a strong rich and vibrant : john college strives to create a strong rich and vibrant campus community with students representing a large number of

User Account

All Pages