Drill 22 ·
Projected Income Statement Drill 22 is a practice drill. It contains 5 original questions created by Brian Stewart, a Barron's test prep author with over 20 years of tutoring experience.
A SaaS company projects next year's income statement from a base year plus stated assumptions; uses an invented company and original figures.
Veraclae Software sells a subscription project-management tool. The owner is building a projected income statement for 2026 from the 2025 results below, using three planning assumptions: (1) revenue grows 25 percent, (2) cost of goods sold stays at 25 percent of revenue, and (3) operating expenses stay flat in dollars. All figures are in dollars; round to the nearest dollar.
Veraclae Software: 2025 Income Statement and 2026 Projection Inputs
| Item | Amount |
|---|---|
| Revenue (2025) | 800,000 |
| Cost of goods sold (2025) | 200,000 |
| Gross profit (2025) | 600,000 |
| Operating expenses (2025) | 360,000 |
| Operating profit (2025) | 240,000 |
| Assumption 1: revenue growth | +25% |
| Assumption 2: COGS as % of revenue | 25% |
| Assumption 3: operating expenses | flat (unchanged) |