Your firm has net income of $245 on total sales of $1,080. Costs are $610 and depreciation is $120. The tax rate is 25 percent. The firm does not have interest expenses. What is the operating cash flow? Multiple Choice O O O $421 $249 $383 $306
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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- 1. SSSSS’ operating income (EBIT) is P500,000. The company’s tax rate is 40 percent, and its operating cash flow is P450,000. The company’s interest expense is P100,000. What is the company’s net cash flow? (Assume that depreciation is the only non-cash item in the firm’s financial statements.) 2. Calculate a firm's free cash flow if it has net operating profit after taxes of P60,000, depreciation expense of P10,000, net fixed asset investment requirement of P40,000, a net current asset requirement of P30,000 and a tax rate of 30%Problem 2-8 Corporate Taxes (LG2-3) Everybody’s Fitness's 2021 income statement is reported below (in millions of dollars) (Use corporate tax rate of 21 percent for your calculations.) Everybody’s Fitness Income Statement for 2021(in millions of dollars) Net sales (all credit) $ 2,485 Less: Cost of goods sold 760 Gross profits $ 1,725 Less: Other operating expenses 535 EBITDA $ 1,190 Less: Depreciation and amortization 372 EBIT $ 818 Less: Interest 395 EBT $ 423 Less: Taxes Net income $ Determine the firm’s 2021 tax liability. (Enter your answer in dollars) Determine the firm’s 2021 net income. (Enter your answer in dollars) Determine the firm’s 2021 average tax rate. (Round your answer to 2 decimal places.) Determine the firm’s 2021 marginal tax rate.1. SSSSS’ operating income (EBIT) is P500,000. The company’s tax rate is 40 percent, and its operating cash flow is P450,000. The company’s interest expense is P100,000. What is the company’s net cash flow? (Assume that depreciation is the only non-cash item in the firm’s financial statements.) 2. An analyst has collected the following information regarding YYYYY: Earnings before interest and taxes (EBIT) = P700 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) = P850 million. Interest expense = P200 million. The corporate tax rate is 40 percent. Depreciation is the company’s only non-cash expense or revenue. What is the company’s net cash flow? 3. At the beginning of the year, KKKKK had P100,000 in cash. The company undertook a major expansion during this same year. Looking at its statement of cash flows, you see that the net cash provided by its operations was P300,000 and the company’s investing activities required cash expenditures of…
- Question 3 Working capital management is so critical in the organization. The following information below was obtained concerning the liquidity of the business. You are to study the following financial statements for two furniture stores and then answer the questions which follow. Financial Statements Profit and loss accounts for the year ending 31 December, 2020 X Y K K K K Sales 555,000 750,000 Less Cost of goods sold Opening stock 100,000 80,000 Add Purchases 200,000 320,000 300,000 400,000 Less Closing stock (60,000) (70,000)…Question 1 Consider the following financial information and answer the questionsthat follow:Sales : $250,000Costs : $134,000Depreciation : $10,200Operating expenses : $6,000Interest expenses : $20,700Taxes : $18,420Dividends : $10,600Addition to Retained Earnings : $50,080Long term debt repaid : $9,300New Equity issued : $8,470New fixed assets acquired : $15,000You are required to:i) Calculate the operating cash flow ii) Calculate the cash flow to creditors iii) Calculate the cash flow to shareholders iv) Calculate the cash flow from assets v) Calculate net capital spending vi) Calculate change in NWC Question 2 The following financial information is available for Hero Sports Ltd.:Sales : $45,000Costs : $25,000Addition to retained earnings : $5,500Dividends paid : $900Interest expense : $1,450Tax rate : 40%Compute the depreciation expense. Question 3 Use the following information to answer the question that follow:Net Income : $205,000Profit margin : 7.80%A/R : $151,642Credit sales :…Suppose your company sells services for $325 cash this month. Your company also pays $100 in salaries and wages, which includes $15 that was payable at the end of the previous month and $85 for salaries and wages of this month. Calculate the amount that should be reported as net cash flow from operating activities. Calculate the amount that should be reported as net income. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).
- Q3) A. The following information has been taken from the accounting records of Ahmed and Company in first and second period. Period Sales Profit 2019 $ 100,000 $15,000 2020 150,000 25,000 Calculate: 4) Break Even Point in dollars sales 5) Sales required to earn a profit of $25,000 6) Profit when sales are $200,000Consider the following financial information and answer the questionsthat follow:Sales : $250,000;Costs : $134,000;Depreciation : $10,200;Operating expenses : $6,000;Interest expenses : $20,700;Taxes : $18,420;Dividends : $10,600;Addition to Retained Earnings : $50,080Long term debt repaid : $9,300New Equity issued : $8,470New fixed assets acquired : $15,000You are required to:i) Calculate the operating cash flow ii) Calculate the cash flow to creditors iii) Calculate the cash flow to shareholders iv) Calculate the cash flow from assets v) Calculate net capital spending vi) Calculate change in NWC[EXCEL]Cash Flow DOL: The law firm of Dewey, Cheatem, and Howe has monthly fixed costs of $100,000, EBIT of $250,000, and depreciation charges on its office furniture and computers of $5,000. Calculate the Cash Flow DOL for this firm. Please use excel
- Consider the following financial information and answer the questionsthat follow:Sales : $250,000;Costs : $134,000;Depreciation : $10,200;Operating expenses : $6,000;Interest expenses : $20,700;Taxes : $18,420;Dividends : $10,600;Addition to Retained Earnings : $50,080Long term debt repaid : $9,300New Equity issued : $8,470New fixed assets acquired : $15,000You are required to: i) Calculate the operating cash flowii) Calculate the cash flow to creditorsiii) Calculate the cash flow to shareholdersiv) Calculate the cash flow from assetsv) Calculate net capital spendingvi) Calculate change in NWCK 1. Given the following information for Sookie’s Cookies Co., calculate the depreciation expense: sales = $86,616; costs = $55,374; addition to retained earnings = $791; dividends paid = $1,498; interest expense = $349; tax rate = 26 percent. (Hint: Build the Income Statement and fill in the missing pieces until you get to the depreciation expense. You may have to work from bottom up.)Problem 2-15 Calculating Total Cash Flows Schwert Corp. shows the following information on its 2020 income statement: sales = $227,000; costs = $129,000; other expenses = $7,900; depreciation expense = $14,200; interest expense = $13,700; taxes = $21,770; dividends = $10,500. In addition, you’re told that the firm issued $5,200 in new equity during 2020 and redeemed $3,700 in outstanding long-term debt. a. What was the 2020 operating cash flow? (Do not round intermediate calculations.) b. What was the 2020 cash flow to creditors? (Do not round intermediate calculations.) c. What was the 2020 cash flow to stockholders? (Do not round intermediate calculations.) d. If net fixed assets increased by $30,000 during the year, what was the addition to NWC? (Do not round intermediate calculations.) a. Operating cash flow b. Cash flow to creditors c. Cash flow to stockholders d. Addition to NWC