I’m having trouble understanding the way profit is adjusted, after it is determined that COGS has increased by 194 million SEK during the year.
| 31 December (Swedish krona in millions) | 2017 |
|---|---|
| Profit (Net income) | 21,283 |
| Increase (reduction) in cost of sales | (194) |
| Taxes (tax reduction) on operating profit* | 49 |
| Profit (without allowance) | 21,138 |
- Given the effective tax rate of 25%, taxes (tax reductions) on the operating profit are assumed to be 49 (194 × 25%) for 2017.