Question

Nataro, Incorporated, has sales of $676,000, costs of $338,000, depreciation expense of $82,000, interest expense of $51,000, and a tax rate of 24 percent. Calculate the net income.

Answer 1

To calculate the net income for Nataro, Incorporated, subtract costs and depreciation from sales to find EBIT, then subtract interest and taxes to yield a net income of $155,800.

Step-by-step explanation:

The net income of Nataro, Incorporated can be calculated by following these steps: First, calculate the earnings before interest and taxes (EBIT) by subtracting the costs and depreciation expense from the sales. Next, calculate the earnings before taxes (EBT) by subtracting the interest expense from the EBIT. Lastly, calculate the net income by subtracting the taxes from the EBT.

Detailed calculation steps:

1. EBIT = Sales - Costs - Depreciation expense
2. EBT = EBIT - Interest expense
3. Net Income = EBT - Taxes

Using the provided numbers,

1. EBIT = $676,000 - $338,000 - $82,000 = $256,000
2. EBT = $256,000 - $51,000 = $205,000
3. Taxes = $205,000 × 24% = $49,200
4. Net Income = $205,000 - $49,200 = $155,800