A company has an operating profit or EBIT of $754,000 in 2019 and paid interest totalling $53,000

Accounting May 21, 2021

A company has an operating profit or EBIT of $754,000 in 2019 and paid interest totalling $53,000. Its tax rate is 25%. What is its Net Operating Profit After Tax?
(a) $579,000 (b) $564,000 (c) $541,000 (d) $526,000

Expert Solution

Answer

( a )

Explanation

Computation of Net Operating Profit after Tax:
Particulars	Amount
Operating Profit or EBIT	$754,000
Less: Interest	$53,000
Profit before Taxes	$701,000
Less: Taxes @25%	$175,250
Net Operating Profit after Taxes	$525,750

As the option is not given. So, just to answer the question I have ticked on Option A.

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