Company A has net sales of $250 million and costs of $190 million. The depreciation expense is
Fantastic news! We've Found the answer you've been seeking!
Question:
Company A has net sales of $250 million and costs of $190 million. The depreciation expense is $20 million, and the interest paid is $8.5 million. Assume the tax rate is 25 percent. Company B has the same operation result as Company A except that it does not borrow any debt. Assume Company B also has 25% tax rate.
a. Prepare the income statement of A and B respectively.
b. Calculate NOPAT (net operation profit after tax) and NI (net income) of two companies.
c. Explain NOPAT is a better measure of operation result of a company by comparing NOPAT and NI of the two companies.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: