Question

A company buys 2mm items for $3 each and sells 1mm of those items during a...

A company buys 2mm items for $3 each and sells 1mm of those items during a year for $6 each. Marketing expenses are $200k for the year. The company has $3mm of debt with a 5% interest rate. Its depreciation expense for the year is $100k. the company’s income tax rate is 30%. Create an income statement for the company. Also what is the EBITDA?

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Answer #1
Income Statement Amount($)
Sales-1mm*$ 6 each 6,000,000
Less-
Cost of goods sold
Opening Inventory               -  
Purchased 6,000,000
Closing 3,000,000
Inventory Used 3,000,000
Gross margin(Sales-Inventory used) 3,000,000
Marketing exp.    (200,000)
EBITDA 2,800,000
Depreciation    (100,000)
Interest
3mm*5%    (150,000)
Earning after interest & depreciation 2,550,000
Taxes@30%    (765,000)
EAT 1,785,000
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