Question

Suppose Ningbo Steel had sales revenue of $11,000 sales revenue, cost of goods sold of $5,000,...

Suppose Ningbo Steel had sales revenue of $11,000 sales revenue, cost of goods sold of $5,000, operating expenses of $3000, interest expense of $1,000, a tax rate of 20%, and 1,000 shares of common stock outstanding. Based on this information, net profit after tax was:

A. $1,600

B. $500

C. $1,000

D. $0

Homework Answers

Answer #1

A. $1,600

Working:

Nigbo Steel
Income Statement
Sales Revenue $       11,000
Less Cost of goods sold $         5,000
Gross Profit $         6,000
Less Operating Expense $         3,000
Earning Before Interest and Taxes $         3,000
Less Interest Expense $         1,000
Earning before Tax $         2,000
Less Tax Expense $ 400
Net Profit after tax $         1,600
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