Sales $8,000,000, operating costs excluding depreciation & amortization $4,400,000, EBITDA $3,600,000, Depreciation and amortization $800,000, EBIT $2,800,000, Taxes (40%) $880,000, and Net income $1,320,000.
The CEO would like to see higher sales and forecasted net income of $2,500,000. Assume that operating costs (excluding depreciation and amortization) are 5% of sales and that depreciation and amortization and interest expenses will increase by 10%. The tax rate which is at 40%, will remain the same. What level of sales would generate $2,500,000 in net income?