Ask Question
BusinessBusiness
11 May, 15:33

Bed Bug Inn has annual sales of $137,000. Earnings before interest and taxes is equal to 5.8 percent of sales. For the period, the firm paid $4,700 in interest. What is the profit margin if the tax rate is 34 percent?-2.43 percent1.56 percent3.33 percent-5.29 percent-6.11 percent

+4
Answers (1)
  1. 11 May, 17:22
    0
    Option (B) is correct.

    Explanation:

    EBIT = 5.8 percent of sales

    = 0.058 * $137,000

    = $7,946

    Earning before tax (EBT) = EBIT - Interest

    = $7,946 - $4,700

    = $3,246

    Earning after tax or net income = Earning before tax - Tax @34%

    = $3,246 - $1,103.64

    = $2,142.36

    Profit margin ratio = Net income : Net sales

    = $2,142.36 : $137,000

    = 0.0156 or 1.56%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Bed Bug Inn has annual sales of $137,000. Earnings before interest and taxes is equal to 5.8 percent of sales. For the period, the firm ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Garland Company uses a standard cost system. The standard for each finished unit of product allows for 3 pounds of plastic at $0.72 per pound. During December, Garland bought 4300 pounds of plastic at $0.
Answers (1)
Suppose the government enacts a new law, which requires all tattoo parlors to pass strict licensing tests and also to use a new more costly sterilization process of their tattoo tools. This new law would cause a.
Answers (1)
The Blue Star Fund has assets with a market value of $10.6 million and liabilities of $607,000. What is the net asset value if there are 185,000 shares outstanding?
Answers (1)
The economy is in a recession. The government enacts a policy to increase spending by $2 billion. The MPS is 0.2.
Answers (1)
If a nation has a GDP of 100 billion euros, a population of 10 million, and the exchange rate for the euro is 1.10 = 1$, what is the GDP per capita of this nation in U. S. dollars (rounded to the nearest dollar) ?
Answers (1)
New Questions in Business
Which of the following comparisons best isolates the impact of a change in activity on performance?
Answers (1)
If an investor anticipates an annual rental income from a leased property to be $400,000 dollars, this expected sum has a direct bearing on what the investor will pay for the property. This is an example of
Answers (1)
In comparison to industry averages, Okra Corp. has a low inventory turnover, a high current ratio, and an average quick ratio. Which of the following would be the most reasonable inference about Okra Corp.? A. Its current liabilities are too low. B.
Answers (2)
The individual with the highest valuation of the good will win in which of the following auctions? A. Sealed Bid Auction B. English Auction C. Dutch Auction D. All of the above.
Answers (1)
Explain how banks can create money.
Answers (1)
Home » Business » Bed Bug Inn has annual sales of $137,000. Earnings before interest and taxes is equal to 5.8 percent of sales. For the period, the firm paid $4,700 in interest. What is the profit margin if the tax rate is 34 percent?-2.43 percent1.56 percent3.
Sign Up Forgot Password?