Butterfly Tractors had $15.50 million in sales last year. Cost of goods sold was
ID: 2765429 • Letter: B
Question
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 30%.
What was the firm’s net income and net cash flow? (Enter your answers in millions rounded to 2 decimal places.)
What would happen to net income and cash flow if depreciation were increased by $1.30 million? (Input all amounts as positive values. Enter your answers in millions rounded to 2 decimal places.)
What would be the impact on net income and cash flow if the firm’s interest expense were $1.30 million higher. (Input all amounts as positive values. Enter your answers in millions rounded to 2 decimal places.)
a.What was the firm’s net income and net cash flow? (Enter your answers in millions rounded to 2 decimal places.)
Net Income $__________million Net Cash Flow $__________million b.What would happen to net income and cash flow if depreciation were increased by $1.30 million? (Input all amounts as positive values. Enter your answers in millions rounded to 2 decimal places.)
Net Income Increase or Decrease $_________million Cash Flow Increase or Decrease $_________million c.What would be the impact on net income and cash flow if the firm’s interest expense were $1.30 million higher. (Input all amounts as positive values. Enter your answers in millions rounded to 2 decimal places.)
Net Income Increase or Decrease $____________million Cash Flow Increase or Decrease $____________millionExplanation / Answer
a) Statement showing computations Particulars Amount Sales 15,500,000.00 Costof goods sold (8,300,000.00) Depreciation Expense (2,300,000.00) Interest Payment (1,300,000.00) Net Income before tax 3,600,000.00 Tax rate @30% 1,080,000.00 Net Income after Tax 2,520,000.00 Depreciation Expense 2,300,000.00 Net Cash Flow 4,820,000.00 b) Statement showing computations Particulars Amount Sales 15,500,000.00 Costof goods sold (8,300,000.00) Depreciation Expense (3,600,000.00) Interest Payment (1,300,000.00) Net Income before tax 2,300,000.00 Tax rate @30% 690,000.00 Net Income after Tax 1,610,000.00 Depreciation Expense 3,600,000.00 Net Cash Flow 5,210,000.00 c) Statement showing computations Particulars Amount Sales 15,500,000.00 Costof goods sold (8,300,000.00) Depreciation Expense (2,300,000.00) Interest Payment (2,600,000.00) Net Income before tax 2,300,000.00 Tax rate @30% 690,000.00 Net Income after Tax 1,610,000.00 Depreciation Expense 2,300,000.00 Net Cash Flow 3,910,000.00
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