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 =
Earnings before taxes =
Earnings after taxes =
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|
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fromChapter 10 / Lesson 4