Question

Mattel Inc.’s 2016 financial statements show operating profit before interest and tax of $519,233 thousand, net income of $318,022 thousand, provision for income taxes of $91,720 thousand and net nonoperating expense before tax of $109,491 thousand. Assume Mattel’s statutory tax rate for 2016 is 37%.
-Mattel’s 2016 effective tax rate is:___________

Answer 1

Answer:

22.38%

Explanation:

Given that,

Operating profit before interest and tax = $519,233

Net income = $318,022 thousand

Provision for income taxes = $91,720 thousand

Net non-operating expense before tax = $109,491 thousand

Mattel’s statutory tax rate for 2016 = 37%

Income before income tax:

= Net Income + Provision for income taxes

= $318,022 Thousand + $91,720 Thousand

= $409,742 Thousand

Effective tax rate:

= (Provision for Income taxes ÷ Income before tax) × 100

= ($91,720 Thousand ÷ $409,742 Thousand) × 100

= 0.2238 × 100

= 22.38%