Question

nataro, incorporated, has sales of $663,000, costs of $325,000, depreciation expense of $69,000, interest expense of $44,500, and a tax rate of 21 percent. what is the net income for this firm

Answer 1

Nataro, Incorporated's net income is calculated by subtracting costs, depreciation, and interest expenses from sales, then applying the tax rate to the remaining income. After following the calculation steps, their net income is found to be $177,355.

Step-by-step explanation:

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

1. 
   
3. Subtract the costs ($325,000) and depreciation expense ($69,000) from the sales ($663,000) to get the earnings before interest and taxes (EBIT).
4. 
   
6. Subtract the interest expense ($44,500) from the EBIT to get the taxable income.
7. 
   
9. Apply the tax rate (21%) to the taxable income to calculate the tax payment.
10. 
    
12. Subtract the tax payment from the taxable income to arrive at the net income.

Let's do the calculation:

• 
  
• Sales: $663,000
• 
  
• Costs: $325,000
• 
  
• Depreciation: $69,000
• 
  
• Interest Expense: $44,500
• 
  
• Tax Rate: 21%

EBIT = Sales - Costs - Depreciation

EBIT = $663,000 - $325,000 - $69,000 = $269,000

Taxable Income = EBIT - Interest Expense

Taxable Income = $269,000 - $44,500 = $224,500

Tax Payment = Taxable Income * Tax Rate

Tax Payment = $224,500 * 21% = $47,145

Net Income = Taxable Income - Tax Payment

Net Income = $224,500 - $47,145 = $177,355