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Question about Proforma Income Statement

At the end of last year, Roberts Inc. 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% higher than the $3 billion in sales generated last year.
· Year-end operating costs, excluding depreciation are expected to equal 80% 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%

On the basis of this information, what will be the forecast for Roberts' year-end net income?

Solution Preview

Please see the attached file.

At the end of last year, Roberts Inc. 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 ...

Solution Summary

The solution explains how to prepare a forecasted income statement

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