32) Enigma has the following financial information: Net Income $70,000 Taxable I
ID: 2638504 • Letter: 3
Question
32) Enigma has the following financial information: Net Income $70,000 Taxable Income (EBT) $100,000 Interest Expense $20,000 Depreciation Expense $15,000 Tax Expense $30,000 Increase in Current Assets $20,000 Increase in A/P and Accruals $10,000 Decrease in Gross Fixed Assets $100,000 No changes were made in interest payable or taxes payable. Based on the information in the table above, what is Enigma's cash flow from operations?
A) $85,000
B) $100,000
C) $105,000
D) $75,000
Please show all work....
Explanation / Answer
Particulars
Amount
Amount
Earnings before tax
$100,000
Add: Depreciation
$15,000
Add: Interest expense
$20,000
Operating profit before working capital
$135,000
Add: Increase in current liabilities
$10,000
Less: Increase in current assets
$20,000
Effect of working capital
-$10,000
Cash from operation
$125,000
Less: Income tax (EBT
Particulars
Amount
Amount
Earnings before tax
$100,000
Add: Depreciation
$15,000
Add: Interest expense
$20,000
Operating profit before working capital
$135,000
Add: Increase in current liabilities
$10,000
Less: Increase in current assets
$20,000
Effect of working capital
-$10,000
Cash from operation
$125,000
Less: Income tax (EBT
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