Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Butterfly Tractors had $24.00 million in sales last year. Cost of goods sold was $10.00 million, depreciation expense was $4.00 million, interest payment on outstanding

image text in transcribed
Butterfly Tractors had $24.00 million in sales last year. Cost of goods sold was $10.00 million, depreciation expense was $4.00 million, interest payment on outstanding debt was $3.00 million, and the firm's tax rate was 21%. a. What was the firm's net income? Note: Enter your answer in millions rounded to 2 decimal places. b. What was the firm's cash flow? Note: Enter your answer in millions rounded to 2 decimal places. c. What would happen to net income and cash flow if depreciation were increased by $3.00 million? Note: Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance. d. Would you expect the change in depreciation to have a positive or negative impact on the firm's stock price? e. What would be the impact on net income if depreciation was $1 million and interest expense was $2 million? f. What would be the impact on cash flow if depreciation was $3.00 million and interest expense was $4.00 million? Note: Enter your numeric answer in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance. a. Net income 1.47 million b. Net cash flow million c. Net income would be million c. Cash flow would be million d. Impact on stock price e. Impact on net income f. Cash flow would be million

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

Intermediate Accounting IFRS

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

4th Edition

1119607515, 978-1119607519

More Books

Students also viewed these Accounting questions

Question

Explain the causes of indiscipline.

Answered: 1 week ago

Question

5. Give some examples of hidden knowledge.

Answered: 1 week ago