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    Forcasting Net Income based on given estimates

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    At the end of last year, company a reported the following income statement (in millions of dollars);

    Sales 3,000

    Operating costs excluding depreciation 2,450

    EBITDA 550

    Depreciation 250

    EBIT 300

    Interest 125

    EBT 175

    Taxes (40%) 70

    Net Income 105

    Looking ahead to the following year, the company's CFO has assembled the following information:

    Year end sales are expected to be 10 percent higher then the $3 BILLION IN SALES GENERATED LAST YEAR.

    Year end opeating costs , excluding depreciation, are expected to equal 80 percent of year-end sales.

    Depreciation is expected to increase at the same rate as sales.

    Interest costs are expected to remain unchanged.

    The tax rate is expected to remain at 40 percent.

    Given this information, what will be the forecast for company A's year end net income? Please show calculations.

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    Expected Sales 10% increase 3300 millions
    Operating costs 80% of sales 2640 millions
    Depriciation 10% increase ...

    Solution Summary

    Solution describes the steps in forcasting Net Profit for the year based on given information.