Differing impact of depreciation on income versus cash flow

Assignment Help Financial Accounting

Reference no: EM131222096

Butterfly Tractors had $14 million in sales last year. Cost of goods sold was $8 million, depreciation expense was $2 million, interest payment on outstanding debt was $1 million, and the firm’s tax rate was 35 percent.

a. What was the firm’s net income and net cash flow?

b. What would happen to net income and cash flow if depreciation were increased by $1 million? How do you explain the differing impact of depreciation on income versus cash flow?

Reference no: EM131222096

Questions Cloud

Building be reported on a statement of cash flows : How would the acquisition of a building be reported on a statement of cash flows if purchased by issuing a mortgage note payable in addition to a significant cash down payment?

Income taxes paid during year : Conima Corporation, a Japanese construction firm, reported a balance in Income Taxes Payable of ¥3,736 million at the beginning of Year 7 and ¥14,310 million at the end of Year 7. Net income before income taxes for Year 7 totaled ¥73,051 million. ass..

Describe a job-based point evaluation plan : Briefly describe a job-based point evaluation plan. Discuss four compensable factors that you would include in the job-based point evaluation plan. Be sure to define each factor, justify why you selected it, and provide the weights or scales that ..

Herrington specialty metal sheeting corporation : 1. You are a consultant hired by the Herrington Specialty Metal Sheeting Corporation of Detroit, Michigan to assist the HR Director in redesigning the compensation system. The organization has just gone through an acquisition of a smaller metal sh..

Differing impact of depreciation on income versus cash flow : Butterfly Tractors had $14 million in sales last year. Cost of goods sold was $8 million, depreciation expense was $2 million, interest payment on outstanding debt was $1 million, and the firm’s tax rate was 35 percent. What would happen to net incom..

Draw a star schema diagram for the data warehouse : Bitmap indexing is useful in data warehousing. Taking this cube as an example, briefly discuss advantages and problems of using a bitmap index structure.

Interpretive data analysis : Find a current article from Huffington Post Infographics that includes an infographic and enter the text from the associated article into Wordle. (Note: Make sure the infographic has an associated article with it.)

Weighted moving average method to forecast pretzel sales : Christie's Pretzels uses a weighted moving average method to forecast pretzel sales. It assigns a weight of 5 to the previous month's demand, 3 to demand 2 months ago, and 1 to demand 3 months ago. If sales amounted to 500 pretzels in May, 1,200 ..

Explain the advantages and disadvantages of using wi-fi : The guide should briefly explain the advantages and disadvantages of using Wi-Fi, and provide some guidelines as to when Wi-Fi is an appropriate solution.

User Account

All Pages