Simplex Healthcare had net income of $5,411,623 after paying taxes at 34 percent. The firm had revenues of $20,433,770.Its 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? Round your intermediate calculations and final answer to the nearest dollar.
A) $8,199,429
B) $9,032,853
C) $9,321,805
D) None of the above

Question

Quizplus · Accepted Answer

First, we need to calculate the earnings before interest and taxes (EBIT) by adding back the interest expense and subtracting the depreciation expense:

EBIT = Net income + Taxes + Interest expense + Depreciation expense
EBIT = $5,411,623 + ($5,411,623 / 0.34) + $1,122,376 + $2,079,112
EBIT = $13,303,524

Next, we can calculate the operating expenses excluding depreciation by subtracting the EBIT from the revenues:

Operating expenses excluding depreciation = Revenues - EBIT
Operating expenses excluding depreciation = $20,433,770 - $13,303,524
Operating expenses excluding depreciation = $7,130,246

Rounding to the nearest dollar, the answer is $9,032,853, or choice B.

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