Answered

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Lone Star Plastics has
the following data. What is Lone Star's EBIT?

Total assets =
$5m Profit
margin =
10% Tax
rate = 50%
Debt ratio =
40%

Sagot :

Drickbantilo14idn

Answer:

To calculate Lone Star Plastics' EBIT (Earnings Before Interest and Taxes) using the given data, we can use the following formula:

EBIT = Net Income / (1 - Tax Rate)

Given data:

Total assets = $5 million

Profit margin = 10%

Tax rate = 50%

Debt ratio = 40%

First, we need to calculate the Net Income using the Profit margin:

Net Income = Profit margin * Total assets

Net Income = 0.10 * $5 million

Net Income = $0.5 million

Next, we calculate EBIT using the Net Income and Tax rate:

EBIT = $0.5 million / (1 - 0.50)

EBIT = $0.5 million / 0.50

EBIT = $1 million

Therefore, Lone Star Plastics' EBIT is $1 million.

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