Compute Lowes Co 2013 Net Operating Profit After Tax (NOPAT) using the top down
ID: 2727952 • Letter: C
Question
Compute Lowes Co 2013 Net Operating Profit After Tax (NOPAT) using the top down method and the bottom up method. assuming a 37% total statutory tax rate.
Lowes Company Inc Net Sales $ 50,521 Cost of Sales $ 33,194 Gross Margin $ 17,327 Expenses Selling, general, & administration $ 12,244 Depreciation $ 1,523 Interest - net $ 423 Total expenses $ 14,190 Pre tax earnings $ 3,137 Income tax provision $ 1,178 Net earnings $ 1,959Explanation / Answer
Answer
Top Down method
Figures in $
Particulars
Amount
Net Sales
a
50,521
Cost of Sales
b
33,194
Selling, general, & administration
c
12,244
Depreciation
d
1,523
Earnings before interest and taxes (a-b-c-d)
e
3,560
Tax
f
1317.2
(3560*0.37)
Net operating profit after tax (e-f)
2,243
Bottom up method
Figures in $
Particulars
Amount
Net earnings based on 37% tax rate
a
1976.31
3137*(1-0.37)
Interest net of taxes
b
266.49
423*(1-0.37)
Net operating profit after tax (a+b)
2,243
Top Down method
Figures in $
Particulars
Amount
Net Sales
a
50,521
Cost of Sales
b
33,194
Selling, general, & administration
c
12,244
Depreciation
d
1,523
Earnings before interest and taxes (a-b-c-d)
e
3,560
Tax
f
1317.2
(3560*0.37)
Net operating profit after tax (e-f)
2,243
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