Question
In: Finance
During 2019, Rainbow Umbrella Corp. had sales of $740,000. Cost of goods sold, administrative and selling...
During 2019, Rainbow Umbrella Corp. had sales of $740,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $540,000, $85,000, and $100,000, respectively. In addition, the company had an interest expense of $54,000 and a tax rate of 21 percent. (Assume that interest is fully deductible.) Suppose the company paid out $66,000 in cash dividends. If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year, what was the net new long-term debt? (Do not round intermediate calculations.)
Solutions
Expert Solution
| Net income: | |
| Sales | 740,000 |
| Expenses: | |
| COGS | (540,000) |
| Operating expenses | (85,000) |
| Depreciation | (100,000) |
| Interest | (54,000) |
| Income/ (loss) before tax | (39,000) |
| Taxes/ tax benefit | 8,190 |
| Net income/ (loss) | (30,810) |
| Add: depreciation | $ 100,000 |
| Cash flow from operations | 69,190 |
| Less: dividends | (66,000) |
| New long term debt | - |
No new long-term debt taken.
jeff jeffy answered 1 year agoRelated Solutions
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