Consider the following income statement: Sales Costs Depreciation Taxes $ 821,160 534,240 121,500 35 % Required:...

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Question

Answer 1

Answer #1

(a)
Sales	821160
(-) Costs	534240
(-) Depreciation	121500
Earnings before interest and taxes (EBIT)	165420

(b)
EBIT	165420
(-) Interest	0
Earnings before taxes (EBT)	165420
(-) Taxes @ 35%	57897
Net income	107523

.(c)

EBIT	165420
(+) Depreciation	121500
(-) Taxes	57897
Operating cash flow (OCF)	229023

(d)

Depreciation	121500
(*) Tax %	35%
Depreciation tax shield	42525

Answer 2

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