Butterfly Tractors had $15.50 million in sales last year. Cost of goods sold was $8.30 million, depreciation expense was $2.30 million, interest payment on outstanding debt was $1.30 million, and the firm’s tax rate was 21%.What was the firm’s net income?Note: Enter your answer in millions rounded to 2 decimal places.What was the firm’s cash flow?Note: Enter your answer in millions rounded to 2 decimal places. What would happen to net income and cash flow if depreciation were increased by $1.30 million?Note: Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.Would you expect the change in depreciation to have a positive or negative impact on the firm’s stock price?What would be the impact on net income if depreciation was $1 million and interest expense was $2 million?What would be the impact on cash flow if depreciation was $1.30 million and interest expense was $2.30 million?Note: Enter your numeric answer in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance. a. Net incomeb. Net cash flowc. Net income would bec. Cash flow would bed. Impact on stock pricee. Impact on net incomef. Cash flow would bemillionmillionbybybymillionmillionmillion

Net income is amount of cash money available after making payment to the cost of goods sold and…

Answered: utterfly Tractors had $15.50 million in…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter21: Corporations: Taxes, Earnings, Distributions, And The Statement Of Retained Earnings

Section: Chapter Questions

Problem 4MC

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Butterfly Tractors had $15.50 million in sales last year. Cost of goods sold was $8.30 million, depreciation expense was $2.30 million, interest payment on outstanding debt was $1.30 million, and the firm’s tax rate was 21%.

What was the firm’s net income?
Note: Enter your answer in millions rounded to 2 decimal places.
What was the firm’s cash flow?
Note: Enter your answer in millions rounded to 2 decimal places.
What would happen to net income and cash flow if depreciation were increased by $1.30 million?
Note: Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.
Would you expect the change in depreciation to have a positive or negative impact on the firm’s stock price?
What would be the impact on net income if depreciation was $1 million and interest expense was $2 million?
What would be the impact on cash flow if depreciation was $1.30 million and interest expense was $2.30 million?
Note: Enter your numeric answer in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.