Bruto\'s sales for year 2014 were $74889 thousands of dollars. For that year the

Question

Bruto's sales for year 2014 were $74889 thousands of dollars. For that year the cost of sales without depreciation was 78% the value of sales and depreciation was 7.333% the value of sales.

Calculate the Net Income of Bruto, assuming that the income tax for the company is 35% and that they are projecting an increase in sales of 10%, with an interest expense of $306 thousands of dollars

Note: Express the terms of your answer strictly numerical terms, and rounded to the nearest thousand unit.  Example: If your answer is one million fifty thousand and one hundred dollars (or $1,050,100), write: 1050.

Explanation / Answer

Particulars Amount for 2014 (in thousands of dollars) Working notes for 2014 Amount for 2015 (in thousands of dollars) Working notes for 2015 Sales                             74,889.00                         82,377.90 74,889 *110% Cost of sales                             58,413.42 74,889*78%                         64,254.76 82377.90*78% Depreciation                                5,491.61 74,889*7.333%                           5,491.61 Same as 2014 since depreciation does not vary with sales Interest                                             -                                 306.00 Earings before tax (Sales- cost of sales - Depreciation - Interest)                             10,983.97                         12,325.53 Tax @35%                                3,844.39                           4,313.93 Net Income (EBT- Tax)                                7,139.58                           8,011.59 Net Income (EBT- Tax)                                7,140.00                           8,012.00 Net income for Bruto is $8,012(in thousands)

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