Question

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 this 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 70% 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 that information, what will be the forecast for Roberts' year-end net income? Enter your answer in millions. For example, an answer of $25,400,000 should be entered as 25.40. Round your answer to two decimal places.

$    million

Answer 1

	Last Year	Next Year
Sales	3,000.00	3,300.00
Operating costs excluding depreciation	2,450.00	2,310.00
EBITDA	550.00	990.00
Depreciation	250.00	275.00
EBIT	300.00	715.00
Interest	125.00	125.00
EBT	175.00	590.00
Taxes (40%)	70.00	236.00
Net income	105.00	354.00
Hence, expected net income = $354 million