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ASSUMPTIONS

Sales Price per Unit $49.99
Gross Margin = (Revenues - cost of goods sold) / Revenues 25%
Depreciation & amortization as a % of capital expenditures 25%
Tax Rate 35%
Year 2014 2015 2016 2017 2018
Units Sold 200,000
Growth Rate Of Unit Sold 5% 13% 15% 9%
Operating Expenses as % of Sales (2014 Only) 10%
Operating Expense Growth Rate 4% 4% 4% 4%
Capital Expenditures $1,750,000 $1,775,000 $1,800,000 $1,825,000 $1,850,000
Interest Expense $0 $10,000 $10,000 $10,000 $12,500
Income Statement
Year 2014 2015 2016 2017 2018
Units Sold
Price per Unit
Revenue
Cost of goods sold
Gross Profit (defined as Revenue - COGS)
Operating Expenses
Earnings Before Interest Taxes Depreciation And Amortization (Ebitda)
EBITDA / Revenue (%)
Depreciation and Amortization
Operating Income (defined as EBITDA - Depreciation and Amortization)
Interest Expense
Pre-tax Net Income (Operating Income - Interest Expense)
Income Taxes
Net Income (Pret-tax Net Income - Income Taxes)
If Depreciation & Amortization as a % of Capital Expenditures is changed to 30%, what is Net Income in 2017?

User Markusk
by
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1 Answer

4 votes

Answer:

Income Statement

Year 2014 2015 2016 2017 2018

Units Sold 200,000 210,000 237,300 272,895 297,456

Price per Unit $49.99 $49.99 $49.99 $49.99 $49.99

Revenue $9,998,000 $10,497,900 $11,862,627 $13,642,021 $14,869,825

COGS $7,498,500 $7,873,425 $8,896,970 $10,231,516 $11,152,369

G/Profit $2,499,500 $2,624,475 $2,965,657 $3,410,505 $3,717,456

Operating

Expenses 999,800 1,039,792 1,081,384 1,124,639 1,169,624

EBITDA $1,499,700 $1,584,683 $1,884,273 $2,285,866 $2,547,832

EBITDA / Revenue

(%) 15% 15.1% 15.9% 16.8% 17.1%

Depreciation and Amortization

$437,500 $443,750 $450,000 $456,250 $462,500

Operating

Income $1,062,200 $1,140,933 $1,434,273 $1,829,616 $2,085,332

Interest

Expense $0 $10,000 $10,000 $10,000 $12,500

Pre-tax $1,062,200 $1,130,933 $1,424,273 $1,819,616 $2,072,832

Net Income (Operating Income - Interest Expense)

Income (35%)

Taxes $371,770 $395,827 $498,495 $636,866 $725,491

Net $690,430 $735,106 $925,778 $1,182,750 $1,347,341

Income (Pret-tax Net Income - Income Taxes)

Step-by-step explanation:

a) Data and Calculations:

Sales Price per Unit $49.99

Gross Margin = (Revenues - cost of goods sold) / Revenues 25%

Depreciation & amortization as a % of capital expenditures 25%

Tax Rate 35%

Year 2014 2015 2016 2017 2018

Units Sold 200,000 210,000 237,300 272,895 297,456

Growth Rate

Of Unit Sold 5% 13% 15% 9%

Sales

Revenue $9,998,000 $10,497,900 $11,862,627 $13,642,021 $14,869,825

COGS $7,498,500 $7,873,425 $8,896,970 $10,231,516 $11,152,369

Operating

Expenses 999,800 1,039,792 1,081,384 1,124,639 1,169,624

as % of Sales (2014 Only) 10%

Operating Expense Growth Rate 4% 4% 4% 4%

Capital

Expenditures $1,750,000 $1,775,000 $1,800,000 $1,825,000 $1,850,000

Interest Expense $0 $10,000 $10,000 $10,000 $12,500

Depreciation $437,500 $443,750 $450,000 $456,250 $462,500

G/Profit = (Gross Profit defined as Revenue - COGS)

COGS = Cost of Goods Sold

User Brett Weber
by
8.4k points
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