From reading a company budgeted income statement for year 2019, it was found that their net...

From reading a company budgeted income statement for year 2019, it was found that
their net sales was $120,000. It costed $23,490 to make the goods. They have to spend
$12,000 and $18,000 on selling and administrative expenses respectively. They also paid
an interest on their debt in the amount of $6,510. The marginal tax rate was 35%. Find
the Operating income, net income after taxes and net profit margin ?

Solutions

Expert Solution

Solution :-

Operating Income = Net Sales - COGS - S&A Exps

= $120,000 - $23,490 - $30,000

= $66,510

Net Income after taxes =

Taxable income = Operating Income - Interest

Taxable income = $66,510 - $6,510 = $60,000

Net Profit = $60,000 - ( 35% * $60,000 ) = $39,000

Net Profit margin = Net Profit / Net Sales

= $39,000 / $120,000

= 0.3250

= 32.50%

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Rahul Sunny answered 1 year ago

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