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23 October, 17:15

A company has sales of $1,250,000, cost of goods sold of $750,000, depreciation expenses of $250,000 and interest expenses of $55,000. If the company's tax rate is 34%, what is this firm's net profit?

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  1. 23 October, 17:41
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    Gross Profit = 500,000 (Sales - COGS) Net Profit = Gross Profit - Indirect exp - Dep) = 500,000-55,000 - 250,000 = 195,000Tax = 66,300Net Profit After TAX = NPBT - Tax = 195,000 - 66,300 = 128,700

    Explanation:

    Sale - Cost of goods Sold = Gross Profit

    1,250,000-750,000 = 500,000

    Net profit = Gross Profit - Indirect Exp - Depreciation)

    = 500,000-55,000 - 250,000

    = 195,000

    Tax = 195,000 x 34/100

    = 66,300

    NPAT = NPBT - tax

    195,000-66,300 = 128,700
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