Enter the total revenue or expenses ($), the total assets ($), and the net profit before tax ($) into the Materiality Calculator. The calculator will evaluate the Materiality.

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## Materiality Formula

The following formula is used to calculate the Materiality.

M = .0075 * R + .015 * A + .075 * P

Variables:

- M is the Materiality ($)
- R is the total revenue or expenses ($)
- A is the total assets ($)
- P is the net profit before tax ($)

## How to Calculate Materiality?

The following steps outline how to calculate the Materiality.

- First, determine the total revenue or expenses ($).
- Next, determine the total assets ($).
- Next, determine the net profit before tax ($).
- Next, gather the formula from above =M = .0075 * R + .015 * A + .075 * P
- Finally, calculate the Materiality.
- After inserting the variables and calculating the result, check your answer with the calculator above.

**Example Problem:**

Use the following variables as an example problem to test your knowledge.

total revenue or expenses ($) = 50000

total assets ($) = 10000

net profit before tax ($) = 30000

M = .0075 * R + .015 * A + .075 * P =** ** ?