Question - A firm reported the following income statement for 2016 (in millions of dollars):
Net Sales 20,367
Operating expenses (17,484)
Restructuring charge (65)
Operating profit 2,818
Gain on asset sales 1,083
Interest expense (363)
Interest income 118
3,656
Provision for income taxes 1,606
Net income 2,050
Operating expenses include $1,230 million from expected returns on pension plan assets.
a. Reformulate this statement to distinguish operating items from financing items. Identify core operating income from sales, after tax. The firm's statutory tax rate is 37%.
b. Calculate the effective tax rate on core operating income.