Pepsi, Inc. reported the following income statement for 1999 (in millions) of dollars:

Net sales ........... 20,367

Operating expenses .... 117,484

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

a. Reformulate this statement to distinguish operating items from financing items and operating income from sales from other operating income. Identify operating income after tax. The firm's statutory tax rate is 36.1 percent.

b. Calculate the effective tax rate on operating income from sales.