Simplex Healthcare had net income of $5,411,623 after paying taxes at 34 percent. The firm had revenues of $20,433,770. Their interest expense for the year was $1,122,376, while depreciation expense was $2,079,112. What was the firm's operating expenses excluding depreciation?

Question

Quizplus · Accepted Answer

Net income after tax = $5,411,623
Revenue = $20,433,770
Interest expense = $1,122,376
Depreciation expense = $2,079,112

We can use the formula: 
Net income = Revenue - Operating expenses - Interest expense - Taxes
We know Net income and Taxes, and we just calculated Interest expense. Therefore, we can rearrange the formula to solve for Operating expenses:

Operating expenses = Revenue - Interest expense - Taxes - Net income
Operating expenses = $20,433,770 - $1,122,376 - (0.34 x $20,433,770) - $5,411,623
Operating expenses = $20,433,770 - $1,122,376 - $6,942,373.80 - $5,411,623
Operating expenses = $7,957,396.20

However, we need to exclude depreciation expense from the operating expenses:
Operating expenses (excluding depreciation) = $7,957,396.20 - $2,079,112
Operating expenses (excluding depreciation) = $5,878,284.20

Thus, the answer is B.

Simplex Healthcare Had Net Income of $5,411,623 After Paying Taxes