Question

Zomby Co.’s revenues for the current year is $30,000. Its net fixed assets are $10,000,
short-term liabilities are $3,000, long-term liabilities are $12,000 and shareholders’
equity is $7,000. Depreciation expense of the company is 25% of its net fixed assets
and its interest expense is 10% of its long-term debt. If costs of goods sold is $22,500,
general and administrative expenses are $6,000 and tax rate is 40%, calculate the
following:
a. Current Assets
b. EBIT
c. Net Income
d. Operating Cash Flow

Answer 1

total of liabilities and shareholders equity	total of current liabilities+long term debt+ shareholders equity	3000+12000+7000	22000
current assets	total of liabilities and shareholders equity = total of current assets+ net fixed assets	22000 = current assets+10000	current assets = 22000-10000 = 12000
EBIT
revenue		30000
cost of goods sold		22500
gross profit		7500
less administrative expenses		6000
depreciation		2500
2-EBIT		-1000
less interest		1200
EBT		-2200
tax		0
3-net income/ loss		-2200
operating cash flow
operating cash flow		-2200
add depreciation		2500
4-operating cash flow		300