Question

Kwok Enterprises has the following income statement. How much after-tax operating income does the firm have?

Sales$1,850
Costs $1,400
Depreciation250
EBIT$200
Interest expense 70
EBT$130
Taxes (40%) 52
Net income$78

Answer 1

The after-tax operating income of Kwok Enterprises is $78.

Step-by-step explanation:

In order to calculate the after-tax operating income, we need to start with the EBIT (Earnings Before Interest and Taxes) which is $200. Then, we subtract the interest expense of $70 to get the EBT (Earnings Before Taxes) which is $130. Next, we calculate the taxes by multiplying the EBT by the tax rate of 40%, which gives us $52. Finally, we subtract the taxes from the EBT to find the after-tax operating income, which is $78.