In: Finance
Butterfly Tractors had $15.00 million in sales last year. Cost of goods sold was $8.20 million, depreciation expense was $2.20 million, interest payment on outstanding debt was $1.20 million, and the firm’s tax rate was 21%.
a. What was the firm’s net income? (Enter your answers in millions rounded to 2 decimal places.)
b. What was the firm’s cash flow? (Enter your answers in millions rounded to 2 decimal places.)
c. What would happen to net income and cash flow if depreciation were increased by $1.20 million? (Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.)
f. What would be the impact on cash flow if depreciation was $1.20 million and interest expense was $2.20 million? (Enter your numeric answer in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.)
Given,
Sales = $15 million
Cost of goods sold = $8.20 million
depreciation expense = $2.20 million
Interest = $1.20 million
Tax rate (t) = 21% or 0.21
Solution :-
Part 'f' is denoted as part 'd' in the answer.