INCOME STATEMENT Hermann Industries is forecasting the following income statement:
|
Sales |
$8,000,000 |
|
Operating costs excluding depr. & amort. |
4,400,000 |
|
EBITDA |
$3,600,000 |
|
Depreciation & amortization |
800,000 |
|
EBIT |
$2,800,000 |
|
Interest |
600,000 |
|
EBT |
$2,200,000 |
|
Taxes (40%) |
880,000 |
|
Net income |
$1,320,000 |
The CEO would like to see higher sales and a forecasted net income of $2,500,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 10%. The tax rate, which is 40%, will remain the same. What level of sales would generate $2,500,000 in net income?