Question
In: Finance
Complete the following Income Statement for 12/31/2019 with these assumptions which are in no particular order:...
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 output in a number and finish based on the 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 12
3. The Contribution Rate for this company is 40%
4. They have an Interest Coverage ratio of 5
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
Solutions
Expert Solution
1. Sales = Accounts Receivable * Turnover Ratio
Sales = 7000000 * 12 = $84000000
2. Variable Costs = Sales * (1 - Contribution rate) = 84000000 * 0.60 = $50400000
3. Fixed Costs = Sales * (1 - Operating profit) - Variable Costs = 84000000 * 0.7 - 50400000 = $8400000
4. Interest = Sales * Operating profit / Interest Coverage ratio = 84000000 * 0.30 / 5 = 5040000
jeff jeffy answered 2 years agoRelated Solutions
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Current Receivables, net
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Interest expense
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Income taxes
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Total expenses
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22,000
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Interest Income
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Office Supplies Expense
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