Question

Complete the following Income Statement for 12/31/2019 with these assumptions which are in no particular order:

HINT: Determine revenue as a starting point. If you cannot figure that out put in a number and finish based on rest of the assumptions as this will allow you to receive some points.

1. The company has an Operating Profit Margin of 30%

2. The company has an Account Receivable turnover of 10

3. The Contribution Rate for this company is 40%

4. They have an Interest Coverage ratio of 4

5. All sales for the company were on credit

6. They have a 30% tax rate

7. The account receivable balance as of 12/31/2019 was $7,000,000

Sales                                               

-Fixed Costs

- Variable Costs

EBIT

- Interest

Profit before Tax

- Tax

Net Income

Answer 1

Steps	Particulars	Amont	Workings	Formulas
A	Sales	70000000	7000000*10
B=A-C	Variable cost	67200000	Sales - contribution
C	Contribution	2800000	7000000*40%	Salesx Contribution ratio
D=C-E	Fixed Cost	700000
E	EBIT	2100000	7000000*30%	Operating margin = EBIT/Sales
F	Interest	525000	2100000/4	EBIT/Interst coverage ratio
G=E-F	PBT	1575000
H	Tax	472500	1575000*30%
I=G-H	PAT	1102500