ANNUAL INCOME STATEMENT WBA Fiscal Year Ending 2014 Sales (Net) 76,392 Cost of Goods Sold 53,495 Gross Profit 22,897 Selling, General, & Admin Expenses 17,898 Operating Income Before Depreciation 4,999 Depreciation, Depletion, & Amortiz 1,316 Operating Income After Depreciation 3,683 Interest Expense 162 Non-Operating Income/Expense 1,008 Special Items -972 Pretax Income 3,557 Income Taxes - Total 1,526 Minority Interest 99 Income Before EI&DO 1,932 Extraordinary Items 0 Discontinued Operations 0 Net Income (Loss) 1,932
If I have above income statement.
I calculate my Nopat as =EBIT(1-t) t=.35 assuming
so Nopat = 3683(1-.35) = 2393.95$
I dont understand how has this tax shield helped me??
I do understand that it reduces my taxable income by 1289 but if I look at the income statement we just keep subtracting all the expenses after the EBIT(3683) to reach NI of 1932$
So when does 1289 come in use??