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
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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