<em>In a firm's income statement, interest payments on debt are deducted </em><em>before </em><em>corporate taxes are calculated, which</em><em> reduces</em><em> the firm's tax liability.</em>
<h3>Income statement: What is it?</h3>
An overview of the company's operations for a specific time period is provided in the income statement. The revenue (gross and net sales), cost of products sold, operational expenditures (selling and general and administrative expenses), taxes, and net profit or loss are the statement's primary components.
<h3>What is displayed on a firm's income statement?</h3>
The statement logically and coherently presents the company's revenue, costs, gross profit, selling and administrative expenses, other expenses and income, taxes paid, and net profit.
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Answer:
0.25 or 25%
Explanation:
The computation of the gross profit rate is shown below:
Gross profit rate = Gross profit ÷ Net sales revenue
where,
Net sales revenue = Sales revenue - Sales Returns and Allowances - Sales Discounts
= $2,000,000 - $250,000 - $50,000
= $1,700,000
And, the Cost of goods sold is $1,275,000
So, the gross profit is
= $1,700,000 - $1,275,000
= $425,000
So, the gross profit rate is
= $425,000 ÷ $1,700,000
= 0.25 or 25%
