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	124
EBT	$176
Taxes (25%)	44
Net income	$132

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 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 25%.

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. Do not round intermediate calculations. Round your answer to two decimal places.

$    million

Answer 1

Profit statement for the next year is given as-

		Amount in Millions
	Sales	$3,300.0	(1.10 times last year sales i.e 3000*1.1)
Less	Operating costs excluding depreciation	$2,640.0	(80% of sales i.e 80% of 3300)
	EBITDA	$660.0
Less	Depreciation	$275	(1.10 times last year depreciation i.e 1.10 *250)
	EBIT	$385.0
Less	Interest	$124	(Same as previous year)
	EBT	$261.0
Less	Taxes (25%)	$65.25	(25% of EBT)
	Net income	$195.75

Hence robert's year end net income is $195.75 Millions

=195.75