Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Butterfly Tractors had $20.00 million in sales last year. Cost of goods sold was $9.20 million, depreciation expense was $3.20 million, interest payment on outstanding

Butterfly Tractors had $20.00 million in sales last year. Cost of goods sold was $9.20 million, depreciation expense was $3.20 million, interest payment on outstanding debt was $2.20 million, and the firms tax rate was 21%.

a. What was the firms net income? (Enter your answers in millions rounded to 2 decimal places.)

b. What was the firms cash flow? (Enter your answers in millions rounded to 2 decimal places.)

c. What would happen to net income and cash flow if depreciation were increased by $2.20 million? (Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.)

f. What would be the impact on cash flow if depreciation was $2.20 million and interest expense was $3.20 million? (Enter your numeric answer in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions