the bubba corp. had net income before taxes of $200.000 and sales of $200.000. if it is in the 50% tax bracket ifs after tax profit margin is?
(after tax profit)/(sales)
= 100,000/200,000
= 50%
answer
To calculate the after-tax profit margin, we need to subtract the taxes from the net income and then divide it by the sales.
Given:
Net income before taxes = $200,000
Sales = $200,000
Tax bracket = 50%
Step 1: Calculate the taxes paid:
Taxes = Net income before taxes * Tax bracket
= $200,000 * 50% = $100,000
Step 2: Calculate the after-tax net income:
After-tax net income = Net income before taxes - Taxes
= $200,000 - $100,000 = $100,000
Step 3: Calculate the after-tax profit margin:
After-tax profit margin = (After-tax net income / Sales) * 100%
= ($100,000 / $200,000) * 100%
= 50%
Therefore, the after-tax profit margin for Bubba Corp. is 50%.
To calculate the after-tax profit margin, we first need to find the amount of taxes paid by the Bubba Corp. using the provided information that it is in the 50% tax bracket. Here's how you can do it:
1. Multiply the net income before taxes by the tax rate to find the amount of taxes paid:
Taxes = Net income before taxes * Tax rate
In this case, the tax rate is 50%, or 0.50, and the net income before taxes is $200,000:
Taxes = $200,000 * 0.50
Taxes = $100,000
2. Subtract the taxes paid from the net income before taxes to find the after-tax income:
After-tax income = Net income before taxes - Taxes
After-tax income = $200,000 - $100,000
After-tax income = $100,000
3. Finally, calculate the after-tax profit margin by dividing the after-tax income by sales and multiplying by 100 to get a percentage:
After-tax profit margin = (After-tax income / Sales) * 100
After-tax profit margin = ($100,000 / $200,000) * 100
After-tax profit margin = 0.5 * 100
After-tax profit margin = 50%
Therefore, the after-tax profit margin for the Bubba Corp. is 50%.