Question

You have the following income statement data:

Sales - $900
Cost of goods sold (Depreciation not included) = $485
Depreciation - $120
Interest expense = $52
Tax rate - 35%
Calculate earnings before interest and taxes (EBIT); round to 2 decimal points; example 400.00

Answer 1

$295

Step-by-step explanation:

The computation of the earnings before interest and taxes (EBIT) is shown below:

= Sales - costs of goods sold - depreciation expense

= $900 - $485 - $120

= $295

Simply we deduct the costs of goods sold and the depreciation expense from the sales amount so that the accurate amount can be calculated

All other information which is given is not relevant. Hence, ignored it