Question
In: Finance
During 2018, Raines Umbrella Corp. had sales of $766,000. Cost of goods sold, administrative and selling...
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During 2018, Raines Umbrella Corp. had sales of $766,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $463,000, $103,500, and $149,000, respectively. In addition, the company had an interest expense of $74,000 and a tax rate of 23 percent. (Ignore any tax loss carryforward provisions and assume interest expense is fully tax deductible.) |
| a. | What is the company’s net income/loss for 2018? (Do not round intermediate calculations. Enter your answer as a positive value.) |
| b. | What is the company's operating cash flow? (Do not round intermediate calculations.) |
Solutions
Expert Solution
| a] | Sales | $ 7,66,000 |
| -Cost of goods sold | $ 4,63,000 | |
| -Administrative and selling expenses | $ 1,03,500 | |
| -Depreciation expenses | $ 1,49,000 | |
| =EBIT | $ 50,500 | |
| -Interest | $ 74,000 | |
| =EBT | $ -23,500 | |
| -Taxes at 23% | $ -5,405 | |
| Net loss | $ -18,095 | |
| b] | Operating cash flow = EBIT+Depreciation-Taxes = 50500+149000-(-5405) = | $ 2,04,905 |
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