1 answer

To find Pretax Income 2017? Use the information about Jim's Espresso to answer the following question(s):...

Question:

Use the information about Jims Espresso to answer the following question(s): Jims Espresso Income Statement (2016) Sales 19to find Pretax Income 2017?

Use the information about Jim's Espresso to answer the following question(s): Jim's Espresso Income Statement (2016) Sales 197,670 Costs exc. Dep. 99.160 EBITDA 98,510 Depreciation 6,010 EBIT 92,500 Interest 580 Pretax Income 91,920 Income Taxes (35%) 32,172 Net Income 59,748 Using the percent of sales method, and assuming 9.7% growth in sales, estimate Jim's Espresso

Answers

Following is the completed table:

Particulars Remark Percentage of Sales 2016 2017
Sales Given $      1,97,670.00 $     2,16,843.99
Cost & Exp Given 50.16% $          99,160.00 $     1,08,778.52
EBITDA Sales-Cost & Exp $          98,510.00 $     1,08,065.47
Depreciation Given 3.04% $            6,010.00 $           6,592.97
Interest Given 0.29% $                580.00 $               636.26
EBT EBITDA-Depreciation-Interest $          91,920.00 $     1,00,836.24
Tax 35% x EBT 16.28% $          32,172.00 $         35,292.68
EAT EBT-Tax $          59,748.00 $         65,543.56
  • First we calculate the percent of sales for the year 2016 for each line item
  • Next we calculate the sales of 2017 = sales of 2016 x (1+growth rate)
    • sales of 2017 = 197670 x 1.097
  • Then we find each line item for the year 2017 using the percent of sales found out for the year 2016
.

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