Question
In: Finance
The owner of a bicycle repair shop forecasts revenues of $236,000 a year. Variable costs will...
|
The owner of a bicycle repair shop forecasts revenues of $236,000 a year. Variable costs will be $69,000, and rental costs for the shop are $49,000 a year. Depreciation on the repair tools will be $29,000. The tax rate is 40%. |
| a. |
Calculate operating cash flow for the year by using all three methods: (a) adjusted accounting profits; (b) cash inflow/cash outflow analysis; and (c) the depreciation tax shield approach. |
| Method | Operating Cash Flow |
| Adjusted accounting profits | $ |
| Cash inflow/cash outflow analysis | |
| Depreciation tax shield approach | |
| b. | Are the above answers equal? |
|
Solutions
jeff jeffy answered 7 months agoRelated Solutions
The owner of a bicycle repair shop forecasts revenues of $236,000 a year. Variable costs will...
The owner of a bicycle repair shop forecasts revenues of
$236,000 a year. Variable costs will be $69,000, and rental costs
for the shop are $49,000 a year. Depreciation on the repair tools
will be $29,000. The tax rate is 40%.
a.
Calculate operating cash flow for the year by using all three
methods: (a) adjusted accounting profits; (b) cash inflow/cash
outflow analysis; and (c) the depreciation tax shield approach.
Method
Operating Cash Flow
Adjusted accounting profits
$
Cash inflow/cash...
The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will...
The owner of a bicycle repair shop forecasts revenues of
$160,000 a year. Variable costs will be $50,000, and rental costs
for the shop are $30,000 a year. Depreciation on the repair tools
will be $10,000.
a. Prepare an income statement for the shop
based on these estimates. The tax rate is 20%.
Dollars in minus dollars out.
Adjusted accounting profits.
Add back depreciation tax shield.
b. Calculate the operating cash flow for the
repair shop using the three methods...
The owner of a bicycle repair shop forecasts revenues of $180,000 a year. Variable costs will...
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b. Calculate the Operating cash flow for the repair shop using
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Now calculate the operating cash
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Adjusted accounting profits.
Add back depreciation tax shield.
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The owner of a bicycle repair shop forecasts revenues of 216000 a year.
The owner of a bicycle repair shop forecasts revenues of 216000
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Prepare an income statement for the shop base on the estimate. Tax
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Your friend owns a bicycle shop that derives most of its revenues from repair and maintenance...
Your friend owns a bicycle shop that derives most of its
revenues from repair and maintenance services. Her services range
from simple tune-ups to complex rebuilding of racing and mountain
bikes. She has four employees who work at the shop and she rents
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Respond to the following questions:
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Assuming volume decreases 10%, what will revenues, variable costs and fixed costs be in year 2?
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costs and fixed costsbe in year 2? What will operating income be? What will the
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The following information on maintenance and repair costs and revenues for the last two years is...
The following information on maintenance and repair costs and
revenues for the last two years is available from the accounting
records at Arnie’s Arcade & Video Palace. Arnie has asked you
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maintenance and repair cost.
Month
Maintenance and Repair Cost ($000)
Revenues ($000)
July
$2.31
$59.00
August
3.28
53.00
September
2.80
49.00
October
2.21
65.00
November
2.30
77.00
December
1.14
105.00
January
3.12
45.00
February
3.16
51.00
March
3.02
61.00...
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