Little Books Inc. recently reported $13 million of net income. Its EBIT was $31.

Question

Little Books Inc. recently reported $13 million of net income. Its EBIT was $31.2 million, and its tax rate was 35%. What was its interest expense? [Hint: Write out the headings for an income statement and then fill in the known values. Then divide $13 million net income by (1 - T) = 0.65 to find the pre-tax income. The difference between EBIT and taxable income must be the interest expense. Use this same procedure to work some of the other problems.] Round your answer to the nearest dollar, if necessary.

Explanation / Answer

EBIT = 31.2 Less - INterest = 11.2 answer (balancing figure) EBT = 20 Less - Taxes = 7 Net income = 13

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