Question

nataro, incorporated, has sales of $654,000, costs of $333,000, depreciation expense of $78,000, interest expense of $43,000, and a tax rate of 25 percent. what is the net income for this firm?

Answer 1

The net income for Nataro, Incorporated is calculated by subtracting all costs and depreciation from sales to determine EBIT, then subtracting interest expenses to find EBT, and finally subtracting taxes to calculate net income. The firm's net income is $150,000.

Step-by-step explanation:

To calculate the net income for Nataro, Incorporated, we need to follow these steps:

1. Subtract costs and depreciation expense from sales to determine earnings before interest and taxes (EBIT).
   Sales: $654,000
   Costs: $333,000
   Depreciation: $78,000
   EBIT = $654,000 - $333,000 - $78,000 = $243,000
2. Subtract the interest expense from the EBIT to find the earnings before taxes (EBT).
   Interest Expense: $43,000
   EBT = $243,000 - $43,000 = $200,000
3. Calculate the taxes by multiplying the EBT by the tax rate.
   Tax Rate: 25%
   Taxes = $200,000 * 25% = $50,000
4. Finally, subtract the taxes from the EBT to get the net income.
   Net Income = EBT - Taxes
   Net Income = $200,000 - $50,000 = $150,000

The net income for Nataro, Incorporated is $150,000.