corp had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after tax profit margin is?
12%
sad
To calculate the after tax profit margin, we need to first determine the amount of taxes paid by the corporation using the given tax rate.
The tax paid can be obtained by multiplying the earnings before taxes with the tax rate:
Tax paid = Earnings before taxes * Tax rate
Given that the earnings before taxes are $400,000 and the tax rate is 40%, we can calculate the tax paid as follows:
Tax paid = $400,000 * 0.4 = $160,000
To compute the after tax profit margin, subtract the tax paid from the sales, and then divide the result by the sales:
After tax profit = (Sales - Tax paid) / Sales
Given that the sales are $2,000,000, we can calculate the after tax profit margin:
After tax profit = ($2,000,000 - $160,000) / $2,000,000
After tax profit = $1,840,000 / $2,000,000
After tax profit = 0.92
Finally, convert the after tax profit margin to a percentage by multiplying by 100:
After tax profit margin = 0.92 * 100
After tax profit margin = 92%
Therefore, the after tax profit margin for the corporation is 92%.