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Prepare the income statement for the year

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Question - Hillary Incorporation provided the following information for the year ended December 31, 2019:

Total assets $9,600,000

Total inventory $375,000

Total debt (borrowed at 25%) $6,000,000

Depreciation and Amortization -0-

Total assets turnover 1.25x

Other cash operating expenses $4,500,000

Tax rate 40%

Inventory turnover ratio 8x

DSO 40 days

Martin Hillary, the company's CFO, wants to see a 25 percent increase in net income for the year 2020, and made the following observations: The company's operating profit margin is expected to be 40% for the year 2020.

No changes in the total interest, depreciation and amortization, and the tax rate are expected for the year 2020.

Required -

a. Prepare the income statement for the year 2019.

b. What should the level of sales in 2020 be so that the target net income will be met?

Reference no: EM133045677

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