A company has sales of $1,250,000, cost of goods sold of $750,000, depreciation expenses of $250,000 and interest expenses of $5

Question

allsm [11]

2 years ago

12

A company has sales of $1,250,000, cost of goods sold of $750,000, depreciation expenses of $250,000 and interest expenses of $5

5,000. If the company’s tax rate is 34%, what is this firm’s net profit?

Business

1 answer:

ivann1987 [24] · Answer 1 · 2022-07-24T01:06:49+03:00

<h2>Gross Profit = 500,000 (Sales -COGS)</h2><h2>Net Profit = Gross Profit - Indirect exp- Dep)</h2><h2> = 500,000-55,000 -250,000</h2><h3> = 195,000</h3><h2>Tax = 66,300</h2><h2>Net Profit After TAX = NPBT- Tax</h2><h2> = 195,000- 66,300 = 128,700</h2>

Explanation:

Sale -Cost of goods Sold = Gross Profit

1,250,000-750,000 = 500,000

Net profit = Gross Profit - Indirect Exp - Depreciation)

= 500,000-55,000 -250,000

= 195,000

Tax = 195,000 x 34/100

= 66,300

NPAT = NPBT - tax

195,000-66,300 = 128,700