Question

At the end of last year, Roberts Inc. reported the following income statement (in millions of...

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

Homework Answers

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
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