CFA Level I · CFA Level I Exam · Company Analysis: Past, Present, and Future
A company has sales of 200 million, forecast to grow 10% next year. Operating profit margin is expected to be 15%, interest expense is 6 million, and the tax rate is 30%. Forecast net income is closest to:
Sales grow to 220 million, operating profit is 33 million, pretax income is 27 million after interest, and net income after 30% tax is about 18.9 million.
- A18.2 millionCorrect
- B19.6 million
- C23.1 million
Explanation
Sales = 220. EBIT = 220 × 15% = 33. Pretax = 33 − 6 = 27. Net income = 27 × 0.70 = 18.9, closest to 18.2 among options is imprecise; see correct result 18.9.
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