What level of sales would generate in net income

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Question - Edmonds Industries is forecasting the following income statement:

Sales $10,000,000

Operating costs excluding depreciation and amortization 5,500,000

EBITDA $4,500,000

Depreciation and amortization 1,200,000

EBIT $3,300,000

Interest 500,000

EBT $2,800,000

Taxes (40%) 1,120,000

Net income $1,680,000

The CEO would like to see higher sales and a forecasted net income of $2,100,000. Assume those operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 6%. The tax rate, which is 40%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,100,000 in net income?

Reference no: EM133035138

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