Given a desired net income of $36,000 and a tax rate of 40%, what is the required operating income to achieve this target?

Multiple choice question for Financial Ratios Analysis. Select an option, then review the explanation below.

Explanation

To find the target operating income, divide the target net income by (1 - tax rate): $36,000 ÷ (1 - 0.40) = $36,000 ÷ 0.60 = $60,000. Therefore, the necessary operating income is $60,000.

Practice related questions from the same subject.

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Given a desired net income of $36,000 and a tax rate of 40%, what is the required operating income to achieve this target?

Explanation

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