Calculate the effective tax rate for a company that reports an income tax expense of $3.0 million, profit of $7.5 million, and income before taxes of $10.5 million.
A) 35%
B) 40%
C) 28.6%
D) It cannot be computed with the above information

Question

Quizplus · Accepted Answer

Effective tax rate = Income tax expense / Income before taxes
Effective tax rate = $3.0 million / $10.5 million
Effective tax rate = 0.286 or 28.6%

Calculate the Effective Tax Rate for a Company That Reports