Question

Listed below is the 2018 income statement for Tom and Sue Travels, Inc. TOM AND SUE TRAVELS, INC Income Statement for Year Ending December 31, 2018 (in millions of dollars) Net sales Less: Cost of goods sold Gross profits Less: Other operating expenses Earnings before interest, taxes, $19.000 8.700 $10.300 4.000 depreciation, and amortization (EBITDA) Less: Depreciation Earnings before interest and taxes (EBIT) Less: Interest Earnings before taxes (EBT) Less: Taxes Net income $ 6.300 3.500 2.800 0.825 $1.975 0.710 $ 1.265 The CEO of Tom and Sue's wants the company to earn a net income of $3.290 million in 2019. Cost of goods sold is expected to be 50 percent of net sales, depreciation and other operating expenses are not expected to change, interest expense is expected to increase to $0.925 million, and the firm's tax rate will be 30 percent. Calculate the net sales needed to produce net income of $3.290 million. (Enter your answer in millions of dollars rounded to 3 decimal places.) Net sales million

Answer 1

Net sales(100%)(13.125/0.5)	$26.25 million
Less:COGS(50%)(26.25*0.5)	13.125
Gross profit(50%)(9.125+4)	13.125
Less:other operating expenses	(4)
EBITDA(5.625+3.5)	9.125
Less:Depreciation	(3.5)
EBIT(4.70+0.925)	5.625
Less:interest	(0.925)
EBT(100%)(3.29/0.7)	4.70
Less:taxes(30%)(4.70*30%)	(1.41)
Net income(70%)	3.29