Question

3. Calculate the EBIT for a firm with $4 million total revenues, $3.5 million cost of goods sold, $500,000 depreciation expense, and $120,000 interest expense. A) $500,000 B) $380,000 C) $0 D) -$120,000

Answer 1

C) $0

Step-by-step explanation:

EBIT stands for Earnings Before Interest and Tax mostly known as operating profit.

Calculation of EBIT

Revenue $4,000,000

Less cost of goods sold ($3,500,000)

Gross Profit $500,000

Less Expenses

Depreciation expense ($500,000)

Net Income / (Loss) $0