Dollars in minus dollars out and adjusted accounting profits

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Reference no: EM132039908

The owner of a bicycle repair shop forecasts revenues of $196,000 a year. Variable costs will be $59,000, and rental costs for the shop are $39,000 a year. Depreciation on the repair tools will be $19,000. Prepare an income statement for the shop based on these estimates. The tax rate is 35%. Calculate operating cash flow for the year by using all three methods: (a) Dollars in minus dollars out; (b) Adjusted accounting profits; and (c) Add back depreciation tax shield. Should all the above approaches result in the same value for cash flow. Yes or No

Reference no: EM132039908

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