Net Income and OCF During 2007, Raines Umbrella Corp. had sales of $850,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $630,000,

$120,000, and $130,000, respectively. In addition, the company had an interest expense of $85,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)

a. What is Raines’s net income for 2007?

b. What is its operating cash flow?

c. Explain your results in

(a) and (b). LO.1