Lifeline, Inc., has sales of $590,000, costs of $268,000, depreciation expense of $68,500, interest

Lifeline, Inc., has sales of $590,000, costs of $268,000, depreciation expense of $68,500, interest expense of $35,500, and a tax rate of 40 percent.

Required:

What is the net income for this firm? (Do not include the dollar sign ($).)

Net income

$

 

Explanation:

The income statement starts with revenues and subtracts costs to arrive at EBIT. We then subtract out interest to get taxable income, and then subtract taxes to arrive at net income. Doing so, we get:

 

Income statement
Sales	$	590,000
Costs		268,000
Depreciation		68,500
EBIT	$	253,500
Interest		35,500
Taxable income	$	218,000
Taxes		87,200
Net income	$	130,800