Change in Sales Level
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Reported sales of $2.4 million. Variable costs are 80% of sales and fixed costs are $160,000. The firm has a 35% tax rate and interest expense is $120,000.
If EPS is $3.75, what would the sales level have to change to before EPS would fall below $3.00?
Answer: $2.2 million
I need the calculation in order to compute this in the future. What formula do I use if I do not have the answer in front of me?
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Solution Summary
The change in sales levels are determined. The expert computes the future sales.
Solution Preview
Initially, the total net income is
NI1 = (Sales1 * (1-variable cost) - fixed cost - interest expenses)*(1-t)
NI1 = (2.4 * (1-80%) -0.16 - ...
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