The formula for converting desired net income into operating income is

Question

Quizplus · Accepted Answer

To convert desired net income into operating income, we need to add the income tax expense to the desired net income. The formula for income tax expense is: Income tax expense = Operating income x Tax rate. We can rearrange this formula to solve for operating income, which gives us Operating income = Desired net income ÷ (1 - Tax rate). Therefore, the correct option is C.

The Formula for Converting Desired Net Income into Operating Income