Quantitative Problem: At the end of last year, Edwin Inc. reported the following

Question

Quantitative Problem: At the end of last year, Edwin Inc. reported the following income statement (in millions of dollars):

Looking ahead to the following year, the company's CFO has assembled this information:

Year-end sales are expected to be 5% higher than $4.23 billion in sales generated last year.

Year-end operating costs, including depreciation, are expected to increase at the same rates as sales.

Interest costs are expected to remain unchanged.

The tax rate is expected to remain at 40%.

On the basis of this information, what will be the forecast for Edwin's year-end net income? Round your answer to the nearest whole million. Do not round intermediate calculations. Enter all values as positive numbers.

Sales $4,230 Operating costs excluding depreciation 3,032 EBITDA $1,198 Depreciation 335 EBIT $863 Interest 140 EBT $723 Taxes (40%) 289 Net income $434

Explanation / Answer

1 calculation of the year end net income particulars note number in million dollars 1 Sales 1 4441.50 2 Operating costs excluding depreciation 2 3,183.60 3 EBITDA ( 1 - 2 ) 1,257.90 4 Depreciation 3 351.75 5 EBIT ( 3 - 4 ) 906.15 6 Interest 140 7 EBT 766.15 8 Taxes 40 % ( 7 * 40 % ) 306.46 9 Net income ( 7 - 8 ) 459.69 note 1 sales are 5 % higher that the previous year 4230 + 5 % 4441.5 2 operating costs increase by 5 % 3032 + 5 % 3183.6 3 depreciation increase by 5 % 335 + 5 % 351.75

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---