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Compute an income statement for the shop

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Reference no: EM133182403

Question - The owner of a bicycle repair shop forecasts revenues of $216,000 a year. Variable costs will be $64,000, and rental costs for the shop are $44,000 a year. Depreciation on the repair tools will be $24,000.

Required -

a. Compute an income statement for the shop based on these estimates. The tax rate is 20%.

b. Calculate the operating cash flow for the repair shop using the three methods given below:

Now calculate the operating cash flow.

1. Dollars in minus dollars out.

2. Adjusted accounting profits.

3. Add back depreciation tax shield.

Reference no: EM133182403

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