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bulgar [2K]
3 years ago
15

A firm'sprofit margin when ignoring the effects of financing is 20% with an EBIT of $1.5 million and sales of $5 million. How mu

ch did the firm pay in taxes
Business
1 answer:
nordsb [41]3 years ago
5 0

Answer:

The firm paid taxes of $0.5 million

Explanation:

Profit margin is the percentage of net income to its sales. It is calculated as follow:

Profit Margin =  ( Net profit /  Sales ) x 100

20% = (Net profit / 5 million) x 100

(20/100) x 5 million = Net profit

Net profit = 1 million

EBIT is the earning before the payment of interest expense and tax. It is the net of Gross profit and operating expenses.

net income is calculates from EBIT as follow

Net Income = EBIT - Interest expense - Tax

1 = 1.5 - $0 - Tax (ignoring the effect of financing)

Tax = $1.5 - $1

Tax = $0.5 million

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How can a nation improve its business climate?
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The dilemma is to decide whether to ignore mother's orders or comply with them in this situation.

<h3>What is Opportunity Cost?</h3>

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2 years ago
A company settles a long-term note payable plus interest by paying $68,000 cash toward the principal amount and Page 565 $5,440
Juli2301 [7.4K]

Answer:

$68,000

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