A company has sales of $1,250,000, cost of goods sold of $750,000, depreciation expenses of $250,000 and interest expenses of $55,000. If the company's tax rate is 34%, what is this firm's net profit?

Gross Profit = 500,000 (Sales - COGS) Net Profit = Gross Profit - Indirect exp - Dep) = 500,000-55,000 - 250,000 = 195,000Tax = 66,300Net Profit After TAX = NPBT - Tax = 195,000 - 66,300 = 128,700

Explanation:

Sale - Cost of goods Sold = Gross Profit

1,250,000-750,000 = 500,000

Net profit = Gross Profit - Indirect Exp - Depreciation)

= 500,000-55,000 - 250,000

= 195,000

Tax = 195,000 x 34/100

= 66,300

NPAT = NPBT - tax

195,000-66,300 = 128,700