Textbooks
arrow_drop_down
Question

# Net Income and OCF During 2015, Rainbow Umbrella Corp. had sales of $590,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were$455,000, $85,000, and$125,000, respectively. In addition the company had an interest expense of $65,000 and a lax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)What is the company’s net income for 2015?What is its operating cash flow?Explain your results in (a) and (b). Solution Preview # Explanation:Compute the net income:Income statementParticularsAmountAmountNet sales$590,000 Less:   Costs$455,000 Selling expenses$85,000   Depreciation$125,000$665,000 Earnings before interest and taxes ($75,000)Less: Interest paid$65,000 Taxable income (Loss) ($140,000)Less: Taxes at 35 percent$0 Net income (Loss) ($140,000) Hence, the net income (loss) is ($140,000).

This is a preview of the solution. Sign up to view the complete solution and over a million of other step-by-step textbook solutions. Bartleby is just \$9.99/month.

#### Ask a Question

Ask our subject matter experts your homework question and you'll be notified when it's answered.infoQuestions are typically answered within just a few hours. If your question isn't answered within 48 hours we'll credit your question back.