Question

Your firm has the following income statement items: sales of $55,609,373; income tax of $2,120,584; operating expenses of $12,412,399; cost of goods sold of $31,111,667; and interest expense of $214,767. What is the amount of the firm's EBIT?

Answer 1

Solution:

In order to find EBIT or operating profit we have to follow these steps

• Start with sales figure
• Subtract the COGS amount and this will give gross profit
• Reduce operating expense to get EBIT
• Reduce interest to get Profit before tax
• Reduce tax amount to get net income​

EBIT of company is 12,085,307

Sales	55,609,373
COGS	(31,111,667)
Gross profit	24,497,706
Operating expense	(12,412,399)
Operating profit EBIT	12,085,307
Interest	(214,767)
Profitt before tax	11,870,540
Tax	2,120,584
Net Income	9,749,956