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EBIT => $ 300
Interest => ($ 1000)
Pre-Tax income => ($ 700)
Taxes => $ 200
Net Income => ($ 500)
Suppose we have to adjust EBIT for two non-recurring items (pre-tax): (1). $ 400 one-time lawsuit expense; (2). $ 200 one-time restructuring expense.
Now, the Pre-Tax income should be ($ 100) - once we added back $ 600 to EBIT. So, with those ajustments (reducing losses from -$700 to -$100), how would we adjust the positive $ 200 on the Tax line to reflect the tax impact due to normalization adjustments?
Let’s assume a marginal tax rate of 35%. Read More