Quantitative Problem: At the end of last year, Edwin Inc. reported the following
ID: 2795727 • Letter: Q
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 4% higher than $4.21 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 $4,210 Operating costs excluding depreciation 3,041 EBITDA $1,169 Depreciation 315 EBIT $854 Interest 140 EBT $714 Taxes (40%) 286 Net income $428Explanation / Answer
Particulars Current year Workings Following year Sales 4210 4210*1.04 4378.4 Operating costs excluding depreciation 3,041 3041*1.04 3162.64 EBITDA 1169 1215.76 Depreciation 315 315*1.04 327.6 EBIT 854 888.16 Interest 140 140 EBT 714 748.16 Taxes (40%) 286 748.16*40% 299.264 Net income 428 449 Rounded off