How to Increase Net Income
Well, I have been given a problem by my professor to increase a company's net income. Below is the income statement that I have to use to increase the sales and net income.
Sales $8,000,000
Operating costs $4,400,000
(excluding depreciation &
Amortization)
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
Question:
The CEO would like to see higher sales and a forecasted net income of $2,500,000.
Assume that operating costs (excluding depreciation and amortizationare 55% of sales, and 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?
If someone can help me with this, I will be most grateful!
Thanks
Jlove827