Question #14
Reading: Reading 13 Integration of Financial Statement Analysis Techniques
PDF File: Reading 13 Integration of Financial Statement Analysis Techniques.pdf
Page: 7
Status: Correct
Correct Answer: A
Question
Coastal Drilling Corp (CD
Answer Choices:
A. 60.0%
B. 55.6%
C. 61.9%
Explanation
Tax burden = NI/EBT or 1 - the effective tax rate. The increase in the return on pension
plan assets assumption increased EBIT, EBT, Income Taxes, and Net Income from what it
would have been. Removing $2 million from the reported numbers will reduce EBIT, EBT,
Income Taxes, and Net Income. However, the tax burden ratio will still be 1 - the effective
tax rate.