Depreciation and accounting cash flow

Reference no: EM13706123

A firm in the third year of depreciating its only asset, which originally cost $180,000 and has a 5-year MACRS recovery period, has gathered the following data relative to the current year's operations.

Accruals $15,000

Current assets $20,000

Interest expense $15,000

Sales revenue 400,000

Inventory 70,000

Total costs before depreciation, interest, and taxes 290,000

Tax rate on ordinary income 40%

a. Use the relevant data to determine the operating cash flow (see Equations 4.2 and 4.3) for the current year.

b. Explain the impact that depreciation, as well as any other noncash charges, has on a firms cash flows.

Please provide your own work. Thanks.

Reference no: EM13706123

Questions Cloud

Review news clips from major news outlets : Review news clips from major news outlets (US or international, your choice) reporting on your selected disease, preferably produced when the outbreak was at phase 4-6 of the WHO scale.

What makes for a good investment : What makes for a good investment? Use the approximate yield formula or a financial calculator to rank the following investments according to their expected returns.

Balance sheet preparation : Adam and Arin Adams have collected their personal asset and liability information and asked you to put together a balance sheet as of December 31,2015. The following information is received from the Adams family.

Income statement preparation : On December 31,2015, Cathy Chen, a self-employed certified public accountant (CPA), completed her first full year in business. During the year, she billed $360,000 for her accounting services. She had two employees, a bookkeeper and a clerical ..

Depreciation and accounting cash flow : A firm in the third year of depreciating its only asset, which originally cost $180,000 and has a 5-year MACRS recovery period, has gathered the following data relative to the current year's operations.

What is your kantian view on social media privacy : What is your Kantian view on social media privacy?

How might congressman steve king respond : How might Congressman Steve King respond to "Brutus'" statements on natural rights? Answer in a minimum of three complete sentences using supporting evidence from the lesson.

Narration essay on one of the topics : Write a 500 word narration essay on one of the topics from the list provided below . Althoug narratives serve a variety of purposes, the most succesful ones usually share three basic characteristics: they are clearly organized in time, make a c..

Write a critical essay with an arguable thesis : The objective of the WCT is to write a critical essay with an arguable thesis. The arguable thesis statement needs to be one that you created. Currently your essay is a summary of the information in the packet, this is the number one reaso..

User Account

All Pages