Question

Item 15Item 15If Beck's Bicycles, Inc.'s income statement shows gross profit of $350 million, with operating expenses of $120 million, and if Beck's tax rate is 30%, what is the firm's net income after taxes

Answer 1

$161 million

Step-by-step explanation:

Given that,

Gross profit = $350 million

Operating expenses = $120 million

Tax rate = 30%

First, we need to find out the income before taxes by subtracting operating expenses from the gross profit then we are able to determine net income after taxes.

Income before tax:

= Gross profit - Operating expenses

= $350 million - $120 million

= $230 million

Net income after taxes:

= Income before tax - Taxes

= $230 million - (0.30 × $230 million)

= $230 million - $69 million

= $161 million