The following question(s) refer to the year-end account balances for Jensen Syst

Question

The following question(s) refer to the year-end account balances for Jensen Systems, Inc. The accounts are listed not in the order they appear on the financial statements. The applicable tax rate is 40%.

Income Statement

340

20

115

600

???

Balance Sheet

35

65

30

(175)

35

120

390

135

200

65

1. What was the company's earnings before interest and taxes (EBIT)?

2. What is the company's tax liability?

3. What was the company's Net Income?

4.What is the company's Total Assets?

Cost of Goods Sold

340

Interest Expense

20

Operating Expense (excluding depreciation)

115

Sales

600

Tax

???

Explanation / Answer

1) EBIT:

EBIT=sales-COGS-Operating expenses

Option B is correct

2)

Option d is correct

3)

Option c is correct

4)

Hence option d is correct

Sales $ 600.00 COGS $ 340.00 Op Ex $ 115.00 EBIT $ 145.00

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