Assume a corporation has earnings before depreciation and taxes of $109,000, depreciation of...

Question:

Assume a corporation has earnings before depreciation and taxes of $109,000, depreciation of $47,000 and that it is in a 40 percent tax bracket. Compute its cash flow using the following format.

Earnings before depreciation and taxes =

Depreciation =

Earnings before taxes =

Taxes =

Earnings after taxes =

Depreciation =

Cashflow =

Operating cash flow

Operating cash flow refers to the generated cash of the firm from its business operation. It is a significant indicator for the financial health of the company of whether they produce sufficient cash flow to meet its short term obligation

Answer and Explanation:

The table below shows the new cash flow of the firm.

Earnings before   depreciation and taxes 109,000
Depreciation 47,000
Earnings before taxes 62,000
Taxes 24,800
Earnings after taxes 37,200
Depreciation 47,000
Cash flow 84,200


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Operating Cash Flow: Definition & Examples

from Finance 101: Principles of Finance

Chapter 10 / Lesson 4
9.6K

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