Questions:
Assume ABC Pvt. Ltd. sold 2,000,000 goods, each having the selling price of $50 and cost of $20. ABC pvt. ltd. recorded its receivables of $50,000 and payables of $30,000. The company went into some legal dispute, due to which it had to pay an additional fee of $40,000 to settle the dispute. The company recorded its PPE of $1,000,000 last year. However, it bought 4 buildings for office use on rent, paying $20,000 per building. The net book value of the PPE for the year end was $900,000. There are 100 employees working in the company, each of which get paid $60,000 on annual basis. The company launched a new brand, and spent $30,000 on its advertisement. Net utility expense of the company was recorded as $20,000 for the year ended. The company earned interest income of $800,000. The company took loan of $5,000,000 and paid 20% of the principal amount as interest. The maintenance of the building costed $10,000. The Income Tax Expense was calculated as 12% of Profit Before Tax.

What is the Operating Profit of ABC Pvt. Ltd?

What is its net profit?

Reference answers:
The Operating Profit of ABC Pvt. Ltd. is calculated as follows:

                             Calculation
Sales                        2,000,000 x $50 = 100,000,000
Cost of Goods Sold           2,000,000 x $20 = (40,000,000)
Gross Profit                 100,000,000 - 40,000,000 = 60,000,00

Operating Expenses:

Depreciation                 $1,000,000 - $900,000 = (100,000)
Legal Fee                    (40,000)
Rental Expense               $20,000 x 4 = (80,000)
Wages                        $60,000 x 100 = (6,000,000)
Marketing Expense            (30,000)
Utility Expense              (20,000)
Maintenance Expense          (10,000)
Other Income (Interest)      800,000
Total                        800,000 - (100,000 + 40,000 + 80,000 + 6,000,000 + 30,000 + 20,000 + 10,000) = (5,480,000)

Operating Profit (EBIT) = Gross Profit - Operating Expenses =  60,000,000 - 5,480,000 = 54,520,000 

The operating profit was $54,520,000.

Interest Expense             $5,000,000 x 20% = (1,000,000)

Profit (Loss) Before Tax     54,520,000 - 1,000,000 = 53,520,000
Income Tax                   $53,520,000 x 12% = (6,422,400)

Net Profit (Loss) After Tax 53,520,000 - 6,422,400 = 47,097,600

The Net Profit for ABC Pvt. Ltd. is $47,097,600 for the year ended.