ElectroWizard Company produces a popular video game called Destructo which sells

Question

ElectroWizard Company      produces a popular video game called Destructo which sells for $65. Last      year ElectroWizard sold 100,000 Destructo games, each of which costs $10      to produce. ElectroWizard incurred selling and administrative expenses of      $200,000 and depreciation expense of $100,000. In addition, ElectroWizard      has a $1,000,000 loan outstanding at 8%. Their tax rate is 40%. There are      400,000 common shares outstanding.      Prepare an income statement for ElectroWizard in good form (include      EPS).

Explanation / Answer

electrowizard income statement ( in $)

sales 6500,000

(less) cost of goods 1000,000

gross profit 5500,000

(less) admin. expenses 200,000

EBITDA 5300,000

(less) depriciation expense 100,000

EBIT 5200,000

(less) interest 80,000

PBT 5120,000

(less) taxes 2048,000

net income 3072,000

EPS = 3072,000/400,000 = 7.68

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.