The Income Statement EBT and NI Earnings before taxes EBT EBIT minus interest

The income statement ebt and ni earnings before taxes

  • Arizona State University
  • FIN 300
  • Test Prep
  • You-Snooze-You-Looze
  • 31
  • 100% (2) 2 out of 2 people found this document helpful

This preview shows page 23 - 31 out of 31 pages.

The Income Statement EBT and NI Earnings-before-taxes (EBT) EBIT minus interest expense taxable income Net income (NI) EBT minus taxes
Background image
Statement of Retained Earnings Retained earnings Shows cumulative effect of adjustments to shareholders’ equity resulting from profit, losses, and paying dividends Shows changes in the account for a period based on profit, loss, or dividend paid
Background image
Diaz Manufacturing Statement of Retained Earnings
Background image
Cash Flows Net Cash Flows versus Net Income Accountants focus on net income and shareholders focus on net cash flows. These are not the same because of delays in inflows and outflows, and non-cash revenues and expenses
Background image
Interrelations Among the Financial Statements
Background image
Federal Income Tax Corporate Income Tax U.S. has a progressive tax with rates ranging from 15 percent to 39 percent higher taxable income = higher the tax liability
Background image
Corporate Tax Rates for 2010
Background image
Federal Income Tax Average versus Marginal Tax Rate Average tax rate total taxes paid divided by taxable income for the period Marginal tax rate rate paid on the last dollar earned or the next dollar that will be earned
Background image
Federal Income Tax Dividends and Interest are not equal U.S. tax code allows interest payments on debt to reduce firms’ taxable income does not allow dividend payments to equity to reduce firms’ taxable income debt financing has a lower cost relative to equity financing
Background image

You've reached the end of your free preview.

Want to read all 31 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture