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The company has realized an operating profit of 5 billion won this year. Depreciation cost was...

The company has realized an operating profit of 5 billion won this year. Depreciation cost was 500 million won, and interest cost is 1 billion won. Inventories increased by 1 billion won compared to the beginning and sales bonds increased by 2 billion won. The corporate tax rate applied to this company is said to be 40%. Assume that other conditions are constant and estimate that:

1. Net profit for this year

2. Cash Flows from Changes in Net Driver's Copy

(1 WON = 1, 100 WON = 100. NO CALCULATE FOR DOLLAR PLEASE!)

Solutions

Expert Solution

1.Calculationof Net Profit

Income Statement ( In Million)
Particulars Amount
Operating Profit(EBIT) 5000
Interest 1000
EBT 4000
[email protected]% 1600
Net Profit 2400

2. Calculation Of Cashflow

Cashflow Statement
Particulars Amount
Net operating Profit before tax 5000
(+) Depreciation 500
Operating Cashflow before WC Changes 5500
(-) Increase in Inventory 1000
(-) Increase in sales bonds 2000
Operating cashflow before tax 2500
Tax paid 1600
Net cashflow from operating activity 900
Cashflow from Financing Activity
Interest Paid 1000
Net cashflow from financing activity -1000
Net Cashflow -100

Note : Sales bonds is vague term hence treated as sales receivable. Alternatively it may be taken as bonds, in that case Operating CAshflow will be 2900 and financing cashflow will be net 1000 consequently net cashflow will be 3900


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