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3. Calculate the EBIT for a firm with $4 million total revenues, $3.5 million cost of goods sold, $500,000 depreciation expense, and $120,000 interest expense. A) $500,000 B) $380,000 C) $0 D) -$120,000

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Answer:

C) $0

Explanation:

EBIT stands for Earnings Before Interest and Tax mostly known as operating profit.

Calculation of EBIT

Revenue                               $4,000,000

Less cost of goods sold     ($3,500,000)

Gross Profit                             $500,000

Less Expenses

Depreciation expense          ($500,000)

Net Income / (Loss)                            $0

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