Dharma Supply has earnings before interest and taxes (EBIT) of $500,000, interest expenses of $300,000, and faces a corporate tax rate of 35%.
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Dharma Supply has earnings before interest and taxes (EBIT) of $593,000, interest expenses of $345,000, and faces a corporate tax rate of 36%.
To find the earnings after taxes (EAT) for Dharma Supply, you need to calculate the net income after accounting for the tax expenses. Here's how you can calculate it step-by-step:
1. Start with the Earnings Before Interest and Taxes (EBIT). In this case, the EBIT for Dharma Supply is $500,000.
2. Subtract the interest expenses from the EBIT. In this case, the interest expenses are $300,000. So, the calculation would be:
Earnings Before Taxes (EBT) = EBIT - Interest Expenses
= $500,000 - $300,000
= $200,000
3. Calculate the tax expenses by multiplying the EBT by the corporate tax rate. In this case, the corporate tax rate is 35%. So, the calculation would be:
Tax Expenses = EBT * Tax Rate
= $200,000 * 0.35
= $70,000
4. Finally, subtract the tax expenses from the EBT to find the Earnings After Taxes (EAT). The calculation would be:
Earnings After Taxes (EAT) = EBT - Tax Expenses
= $200,000 - $70,000
= $130,000
Therefore, the Earnings After Taxes (EAT) for Dharma Supply is $130,000.