Gamma company income statement includes the following data

Finance Nov 24, 2020

Gamma company income statement includes the following data. The average tax rate is 24%. Cost of goods sold $16,000; Income taxes paid $3,500; Administrative expenses $5,800; Interest expense $1,500; and Depreciation $1,200. a) What is Beta's net income? b) What must have been the Beta's revenues? c) What is EBIT?

Expert Solution

Profit before tax*tax rate = tax paid

Profit before tax = 3500/24%

=$14,583.33

Net Income = Profit before tax - tax paid

= 14583.33 - 3500

=$11,083.33

EBIT = Profit before tax + interest

= 11083.33 + 1500

= $12,583.33

Revenue = EBIT + Depreciation + Admin expenses + Cost of goods sold

= 12583.33 + 1200 + 5800 + 16000

=$35,583.33

Thanks

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