A company has sales of Rs. 3,000,000, a gross profit margin of 30%, and operating expenses of Rs. 400,000. What is the company’s net income if the tax rate is 25% and there are no interest expenses?Rs. 525000Rs. 450000Rs. 500000Rs. 540000
Question
A company has sales of Rs. 3,000,000, a gross profit margin of 30%, and operating expenses of Rs. 400,000. What is the company’s net income if the tax rate is 25% and there are no interest expenses?Rs. 525000Rs. 450000Rs. 500000Rs. 540000
Solution
Step 1: Calculate Gross Profit Gross profit margin is 30% of sales. So, Gross Profit = 30% of Rs. 3,000,000 = Rs. 900,000
Step 2: Calculate Operating Income Operating Income is Gross Profit minus Operating Expenses. So, Operating Income = Rs. 900,000 - Rs. 400,000 = Rs. 500,000
Step 3: Calculate Net Income Net Income is Operating Income minus Taxes. Taxes are 25% of Operating Income. So, Taxes = 25% of Rs. 500,000 = Rs. 125,000. Therefore, Net Income = Rs. 500,000 - Rs. 125,000 = Rs. 375,000
None of the options provided match the calculated net income. There might be a mistake in the question or the options provided.
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