Question

The Sandhill Chemical Corporation announced that, for the period ending March 31, 2017, it had earned income after taxes of $2,768,916.25 on revenues of $13,115,000. The company's costs (excluding depreciation and amortization) amounted to 61 percent of sales, and it had interest expenses of $392,168. What is the firm's depreciation and amortization expense if its average tax rate is 34 percent?

Answer 1

$527,354.35

Step-by-step explanation:

revenues - expenses - (amortization and depreciation) = operating revenue

operating revenue - interest expense = net income before taxes

net income before taxes x (1 - tax rate) = net income after taxes

net income before taxes = net income after taxes / (1 - tax rate) = $2,768,916.25 / 0.66 = $4,195,327.65

operating revenue = net income before taxes + interest expense = $4,195,327.65 + $392,168 = $4,587,495.65

amortization and depreciation = operating revenue + expenses - revenues = $4,587,495.65 + $8,000,150 - $13,115,000 = $527,354.35