Homework Soursechapter 32 A firms income statement included the following d
chapter 3.2
A firm’s income statement included the following data. The firm’s average tax rate was 20%.
a. What was the firm’s net income?
b. What must have been the firm\'s revenues?
c. What was EBIT?
| Cost of goods sold | $ | 9,000 |
| Income taxes paid | $ | 3,000 |
| Administrative expenses | $ | 4,000 |
| Interest expense | $ | 2,000 |
| Depreciation | $ | 2,000 |
Solution
a.
Net income = (Income tax paid / Tax rate) – Income tax paid
Net income = (3000 / 20%) - 3000
Net income = $12000
.
b.
Revenues = Cost of goods sold + Income tax paid + Administration expense + Interest paid + Depreciation + Net income
Revenues = 9000 + 3000 + 4000 + 2000 + 2000 + 12000
Revenues = $32000
.
c.
EBIT = Net income + Interest expense + Taxes
EBIT = 12000 + 2000 + 3000
EBIT = $17000
