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    shreya44's Avatar
    shreya44 Posts: 1, Reputation: 1
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    #1

    Jun 14, 2008, 12:38 PM
    Income statement
    Ricardo Entertainment recently reported the following income statement:
    Sales $12,000,000
    Cost of goods sold 7,500,000
    EBIT 4,500,000
    Interest 1,500,000
    EBT 3,000,000
    Taxes (40%) 1,200,000
    Net income $ 1,800,000
    The company's CFO wants to see a 25% increase in net income over the next year; she has made the following observations:
    Ricardo's operating margin (EBIT/Sales) was 37.5% this year, and is expected to increase to 40% next year.
    Ricardo's interest expense and tax rate are expected to remain constant.
    What is the percentage sales increase the company needs in order to meet the CFO's target?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
    Uber Member
    		  
    #2

    Jun 14, 2008, 08:36 PM
    Please see our guidelines on posting homework problems:

    https://www.askmehelpdesk.com/financ...-b-u-font.html
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