Companies generate income from their \"regular\" operations and from things like

Question

Companies generate income from their "regular" operations and from things like interest on securities they hold, which is called non-operating income. Mitel Metals recently reported $9,000 of sales, $6,000 of operating costs other than depreciation, and $1,500 of depreciation. The company had no amortization charges and no non-operating income. It had issued $4,000 of bonds that carry a 7% interest rate, and its federal-plus-state income tax rate was 40%. What was the firm's operating income, or EBIT?

$1,100

$1,200

$1,300

$1,400

$1,500

Explanation / Answer

Solution.

Caqlculation For E.B.I.T.

Particulars Amount Sales     9,000.00 Operating costs     6,000.00 Depreciation     1,500.00 EBIT     1,500.00

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