Question

Calculate the growth rate of the company's EBIT from 2005 to 2006:2005:Sales:15,000,000COGS:12,000,000SG&A:500,000Interest Expense: 100,0002006:Sales:20,000,000COGS:16,000,000SG&A:1,000,0000Interest Expense: 100,000A) 12.5%B) 20.0%C) 50%D) 33.3%E) 20.83%

Answer 1

Answer:

B) 20.0%

Explanation:

2005:

Sales:                    15,000,000

COGS:                  (12,000,000)

SG&A:                   (500,000)

EBIT                      2,500,000

2006:

Sales:                    20,000,000

COGS:                  (16,000,000)

SG&A:                  (1,000,0000)

EBIT                      3,000,000

Growth rate = ((3,000,000 - 2,500,000) / 2,500,000 ) x 100 = (500,000 / 2,500,000 ) x 100 = 20%