The Fitness Studio, Incorporated’s income statement lists the following income and expenses: EBITDA = $668,000, EBIT = $538,000, interest expense = $76,000, and net income = $444,000. Calculate the taxes reported on the income statement.
Answer (1)
To find the taxes reported on the income statement, we need to understand the progression from EBIT (Earnings Before Interest and Taxes) to Net Income.
The income statement progression is as follows:
EBIT (Earnings Before Interest and Taxes): $538,000
Subtract Interest Expense: $76,000
This brings us to Earnings Before Taxes (EBT).
EBT = EBIT − Interest Expense = 538 , 000 − 76 , 000 = 462 , 000
Calculate Taxes:
The Net Income is given as $444,000, which is the income after taxes. To find the taxes, subtract Net Income from EBT.
Taxes = EBT − Net Income = 462 , 000 − 444 , 000 = 18 , 000
Therefore, the taxes reported on the income statement are $18,000.
