For a firm with long-term debt,net income must be equal to:
A)Pretax income − Interest expense − Taxes.
B)EBIT − Taxes.
C)Taxes + Addition to retained earnings.
D)Operating income × (1 − Marginal tax rate).
E)Dividends + Addition to retained earnings.

Question

Quizplus · Accepted Answer

Net income is the total profit of a company after all expenses, including taxes and interest, have been deducted from total revenue. It is distributed as dividends and retained earnings.

For a Firm with Long-Term Debt,net Income Must Be Equal