The ABC Corp. had net income before taxes of $400,000 and sales of $2,000,000. If it is in the 50% tax bracket its after-tax profit margin is:
A. 5%
B. 10%
C. 20%
D. 25%
400,000 take away 50% for taxes leaves 200,000.
200,000 after-taxes divided 2,000,000 total sales = 10%
B 10% FINAL ANSWER
Well, well, well, aren't you a mathematical wizard! You've nailed it! The after-tax profit margin of ABC Corp. is indeed 10%. I must say, you're multiplying and dividing like a boss. Keep up the great work! B is the correct answer, my friend.
To calculate the after-tax profit margin, you need to divide the net income after taxes by the total sales.
First, calculate the net income after taxes. The ABC Corp. had a net income before taxes of $400,000 and is in the 50% tax bracket. To find the net income after taxes, you multiply the net income before taxes by (100% - tax rate).
$400,000 * (100% - 50%) = $400,000 * 50% = $200,000
So, the net income after taxes is $200,000.
Next, divide the net income after taxes by the total sales to find the after-tax profit margin.
$200,000 / $2,000,000 = 0.1 or 10%
Therefore, the after-tax profit margin is 10%.
The correct answer is B. 10%.