Answer:
Income Statement
Year 2014 2015 2016 2017 2018
Units Sold 200,000 210,000 237,300 272,895 297,456
Price per Unit $49.99 $49.99 $49.99 $49.99 $49.99
Revenue $9,998,000 $10,497,900 $11,862,627 $13,642,021 $14,869,825
COGS $7,498,500 $7,873,425 $8,896,970 $10,231,516 $11,152,369
G/Profit $2,499,500 $2,624,475 $2,965,657 $3,410,505 $3,717,456
Operating
Expenses 999,800 1,039,792 1,081,384 1,124,639 1,169,624
EBITDA $1,499,700 $1,584,683 $1,884,273 $2,285,866 $2,547,832
EBITDA / Revenue
(%) 15% 15.1% 15.9% 16.8% 17.1%
Depreciation and Amortization
$437,500 $443,750 $450,000 $456,250 $462,500
Operating
Income $1,062,200 $1,140,933 $1,434,273 $1,829,616 $2,085,332
Interest
Expense $0 $10,000 $10,000 $10,000 $12,500
Pre-tax $1,062,200 $1,130,933 $1,424,273 $1,819,616 $2,072,832
Net Income (Operating Income - Interest Expense)
Income (35%)
Taxes $371,770 $395,827 $498,495 $636,866 $725,491
Net $690,430 $735,106 $925,778 $1,182,750 $1,347,341
Income (Pret-tax Net Income - Income Taxes)
Explanation:
a) Data and Calculations:
Sales Price per Unit $49.99
Gross Margin = (Revenues - cost of goods sold) / Revenues 25%
Depreciation & amortization as a % of capital expenditures 25%
Tax Rate 35%
Year 2014 2015 2016 2017 2018
Units Sold 200,000 210,000 237,300 272,895 297,456
Growth Rate
Of Unit Sold 5% 13% 15% 9%
Sales
Revenue $9,998,000 $10,497,900 $11,862,627 $13,642,021 $14,869,825
COGS $7,498,500 $7,873,425 $8,896,970 $10,231,516 $11,152,369
Operating
Expenses 999,800 1,039,792 1,081,384 1,124,639 1,169,624
as % of Sales (2014 Only) 10%
Operating Expense Growth Rate 4% 4% 4% 4%
Capital
Expenditures $1,750,000 $1,775,000 $1,800,000 $1,825,000 $1,850,000
Interest Expense $0 $10,000 $10,000 $10,000 $12,500
Depreciation $437,500 $443,750 $450,000 $456,250 $462,500
G/Profit = (Gross Profit defined as Revenue - COGS)
COGS = Cost of Goods Sold
