Butterfly Tractors had $15.00 million in sales last year. Cost of goods sold was $8.20 million,...

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.)

Solutions

Expert Solution

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.

jeff jeffy answered 1 year ago

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