financial statements16

financial statements16 - Sales level i . Answer: e Diff: M...

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Sales level Answer: e Diff: M i . Swann Systems is forecasting the following income statement for the upcoming year: Sales $5,000,000 Operating costs (excluding depreciation and amortization) 3,000,000 EBITDA $2,000,000 Depreciation and amortization 500,000 EBIT $1,500,000 Interest 500,000 EBT $1,000,000 Taxes (40%) 400,000 Net income $ 600,000 The company’s president is disappointed with the forecast and would like to see Swann generate higher sales and a forecasted net income of $2,000,000. Assume that operating costs (excluding depreciation and amortization) are always 60 percent of sales. Also, assume that depreciation and amortization, interest expense, and the company’s tax rate, which is 40 percent, will remain the same even if sales change. What level of sales would Swann have to obtain to generate $2,000,000 in net income? a. $ 5,800,000 b. $ 6,000,000 c. $ 7,200,000 d. $ 8,300,000 e. $10,833,333 Sales and income statement Answer: d Diff: M ii . Ozark Industries reported net income of $75 million in 2002. The
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financial statements16 - Sales level i . Answer: e Diff: M...

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