Question

Calculate the EBIT for a firm with $4 million total revenues, $3.5 million cost of goods sold, $500,000 depreciation expense, and $120,000 interest expense.

Answer 1

Answer:

$0

Explanation:

Given that,

Total revenues = $4,000,000

Cost of goods sold = $3,500,000

Depreciation expense = $500,000

Interest expense = $120,000

Earnings before interest and taxes (EBIT):

= Total revenues - Cost of goods sold - Depreciation expense

= $4,000,000 - $3,500,000 - $500,000

= $0

Therefore, the EBIT for a firm is $0.