Question: Question #12 See the explanation below to work the problem. XYZ Company, a 'for-profit' business, had revenues of $12 million in 2016. Expenses other than

Question #12

See the explanation below to work the problem.

XYZ Company, a 'for-profit' business, had revenues of $12 million in 2016. Expenses other than

depreciation totaled 75 percent of revenues. XYZ Company, must pay taxes at a rate of 40 percent of

pretax (operating) income. All revenues were collected in cash during the year, and all expenses other

than depreciation were paid in cash.

Depreciation originally was $1.5 million; however, a change in the depreciation schedule (still within

GAAP) has now made the depreciation expense DOUBLE.

Based on this change in depreciation expense, what would XYZ's profit margin be?

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