Question

In: Finance

A company reports sales revenue of $314 million, cost of goods sold of $187 million, selling...

A company reports sales revenue of $314 million, cost of goods sold of $187 million, selling and administrative expenses of $77 million, depreciation of $20 million, and interest expense of $5 million. What is the company's after-tax operating income (to one decimal place) if the corporate tax rate is 30%?

Solutions

Expert Solution

The amount is computed as follows:

= (Sales - cost of goods sold - selling and administrative expense - depreciation) x (1 - tax rate)

= ($ 314 million - $ 187 million - $ 77 million - $ 20 million) x (1 - 0.30)

= $ 30 million x 0.70

= $ 21 million


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