Question

In: Finance

Pancake Village had sales of $1.5 million with depreciation of $350,000 and other operating costs that...

Pancake Village had sales of $1.5 million with depreciation of $350,000 and other operating costs that ran 35% of sales. They paid $180,000 in dividends with a tax rate of 40% and interest expense of $280,000. What was their Net Cash Flow? A. $449,000 B. $767,000 C. $557,000 D. $872,000

Solutions

Expert Solution

CALCULAITON OF NET INCOME AFTER TAX
Sales $         15,00,000
Less : Expenses
Operating Cost 35% of Sales = $             5,25,000
Depreciation $             3,50,000
Interest Expenses $             2,80,000
$      11,55,000
Net Income $        3,45,000
Less: Taxation @ 40% = $            1,38,000
Net income After Tax $            2,07,000
CALCULATION OF THE CASH FLOW
Net Income after Tax= $        2,07,000
Add: Depreciation $        3,50,000
Total Cash Flow $        5,57,000
Answer = Option C = $ 557,000

Note: Depreciation is a non cash expenses so add back to total income

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Rao Construction recently reported $28.00 million of sales, $12.60 million of operating costs other than depreciation,...
Rao Construction recently reported $28.00 million of sales, $12.60 million of operating costs other than depreciation, and $3.00 million of depreciation. It had $8.50 million of bonds outstanding that carry a 7.0% interest rate, and its federal-plus-state income tax rate was 25%. What was Rao's operating income, or EBIT, in millions? a. $14.54 b. $16.56 c. $11.09 d. $16.70 e. $14.40
The POP Corporation had sales of $60 million in 2016. Costs other than depreciation and amortization...
The POP Corporation had sales of $60 million in 2016. Costs other than depreciation and amortization were 60 percent of sales, and depreciation and amortization expenses were $19.6 million. It had $120 million debt with 5 % annual interest. All sales revenues were collected in cash, and costs other than depreciation and amortization must be paid for during the year. The corporate tax rate is 35 percent. a. Set up an income statement for the above information. b. Compute the...
In 2020, Garage Doors Inc. had sales of $350 million. Operating costs, depreciation and interest were...
In 2020, Garage Doors Inc. had sales of $350 million. Operating costs, depreciation and interest were $230 million, $30 million and $10 million respectively. It’s corporate tax rate is 40%. The company reported $40 million in operating current assets and $14 million in operating current liabilities. It also reported net property, plant and equipment of $70 million and Long Term Debt $180 million. For 2019, net operating working capital was $28 million, net property, plant and equipment was $60 million...
A company reported $750,000 of sales, 75% of operating costs other than depreciation, and $7,500 of...
A company reported $750,000 of sales, 75% of operating costs other than depreciation, and $7,500 of depreciation. It had $75,000 of bonds that carry a 7.5% interest rate, and its tax rate was 25%. How much was its net cash flow?
Houston Pumps recently reported $172,500 of sales, $140,500 of operating costs other than depreciation, and $9,250 of depreciation.
Houston Pumps recently reported $172,500 of sales, $140,500 of operating costs other than depreciation, and $9,250 of depreciation. The company had $35,250 of outstanding bonds that carry a 6.75% interest rate, and its federal-plus-state income tax rate was 25%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to spend $15,250 to buy new fixed assets and to invest $6,850 in net operating working capital. What was the firm's free cash...
AT&T recently reported (in millions) $8,250 of sales, $5,750 of operating costs other than depreciation, and...
AT&T recently reported (in millions) $8,250 of sales, $5,750 of operating costs other than depreciation, and $1,100 of depreciation. The company had $3,200 of outstanding bonds that carry a 5% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to make $1,250 of capital expenditures on new fixed assets and to invest $300 in net operating working capital. By how much...
A certain company has sales of $500,000, costs of $350,000, depreciation expense of $30,000 and a...
A certain company has sales of $500,000, costs of $350,000, depreciation expense of $30,000 and a tax rate of 21% Sarah has computed operating cash flow to be $124,800. Which of the following is false? a) sarah's answer is correct b)sarah's answer is off by $30,000 c) sarah could have used any of the methods to compute operating cash flow d) sarah would have gotten the same answer using any of the methods. e)none of the above is false.
The Berndt Corporation expects to have sales of $12 million. Costs other than depreciation are expected...
The Berndt Corporation expects to have sales of $12 million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be $1.5 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. The federal tax rate is 21% (ignore any possible state corporate taxes). Berndt has no debt. a. Set up an income statement. What is Berndt’s expected net income? Its expected net...
The Berndt Corporation expects to have sales of $15 million. Costs other than depreciation are expected...
The Berndt Corporation expects to have sales of $15 million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be $1.875 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Berndt's federal-plus-state tax rate is 40%. Berndt has no debt. Set up an income statement. What is Berndt's expected net income? Enter your answer in dollars. For example, an answer of...
The Berndt Corporation expects to have sales of $12 million. Costs other than depreciation are expected...
The Berndt Corporation expects to have sales of $12 million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be $1.5 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. The federal tax rate is 21% (ignore any possible state corporate taxes). Berndt has no debt. a. Set up an income statement. What is Berndt’s expected net income? Its expected net...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT