The Johnson Materials Inc. has an EBIT of $3,500,000. Its Times Interest Earned (TIE) ratio is 5, Profit Margin is 16% and the tax rate is 35%. Costs of Goods Sold (COGS) is $6 million. Develop an income statement by filling in the blanks in the following table: Sales =
COGS = 6000000
EBITDA =
Depreciation & amortization=
EBIT= 3500000
Interest Expense =
EBT =
Tax =
Net Income =

Answer and Explanation:

The computation of missing amounts is shown below:-

As we know that

Times Interest Earned Ratio = EBIT ÷ Interest Expense

So it can be write as

Interest Expense = EBIT ÷ Times Interest Earned Ratio

= $3,500,000 ÷ 5

= $700,000

Now  

EBT is

= EBIT - Interest Expense

= $3,500,000 - $700,000

= $2,800,000

Now

Tax = 35% of EBT

= 0.35 × $2,800,000

= $980,000

After that

Net Income is

= Earning Before Tax - Tax

= $2,800,000 - 980,000

= $1,820,000

Also,

Profit Margin = Net Income ÷ Sales

So it can be written as

Sales = Net Income ÷ Profit Margin

= $1,820,000 ÷ 16%

= $11,375,000

And,  

EBITDA = Sales - Cost of Goods Sold

= $11,375,000 - $6,000,000

= $5,375,000

Now

EBIT = EBITDA - Depreciation & Amortization

So, it can be written as

Depreciation & Amortization = EBITDA - EBIT

= $5,375,000 - $3,500,000

= $1,875,000

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.