PRO FORMA INCOME STATEMENT: At the end of the year last year, Robert Inc. reported the following income statement (In millions) sales-$ 3,000 Operation costs excluding depreciation-$2450 EBITDA-$550, depreciation- $250, EBIT-$175, taxes (40%)-$70, net income $ 105. Looking ahead to the following year, the company’s CFO has assemebled this information: year end sales are expected to be 10% higher than the $3 billion in sales generated last year , year end operating costs, excluding depreciation, are expected to be equal 80% of year end sales, depreciation is expected to increase at the same rate as sales, interest costs are expected to remain unchanged, the tax rate is expected to remain at 40%. On the basis of that information, what will be the forecast for Robert’s year end net income?
Regression and receivables: Edwards Industries has $320 million in sales. The company expects that its sales will increase 12% this year. Edwards CFO uses a simple linear regression to forecast the company ‘s recievables level for a given level of projected sales. On the basis of recent history, the estimated relationship between receivables and sales (in millions of dollars) is as follows: receivables=$9.25+0.07(sales) Given the estimated sales forecast and the estimated relationship between receivables and sales, what are your forecasts of the company’s year end balance for receivables and it year end days sales outstanding (DSO) ratio? Assume that DSO is calculated on the basis of a 365 day year. Please make both problems original and in excel if possible.