Question

If a firm has revenue, operating expenses, interest expense, depreciation and dividends; how would they compute...

If a firm has revenue, operating expenses, interest expense, depreciation and dividends; how would they compute their earnings before taxes?

Homework Answers

Answer #1

Earnings before taxes are often calculated after deduction of all the cost of goods sold from total revenue generated and after that it is to be deducted by operating expenses and depreciation.it will also be adjusted with deduction of interest because earning before taxes will be calculated after deduction of interest from earning before interest and taxes.

Earning before taxes=[revenue -operating expense - interest expense -dividend payments]

So it can be said that earning before taxes is amount after deduction of all the expenditures including expenses like interest and dividend but before payment of taxes.

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