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The owner of a bicycle repair shop forecasts revenues of $184,000 a year. Variable costs will be $56,000, and rental costs for the shop are
The owner of a bicycle repair shop forecasts revenues of $184,000 a year. Variable costs will be $56,000, and rental costs for the shop are $36,000 a year. Depreciation on the repair tools will be $16,000. The tax rate is 35%. |
a. | Calculate operating cash flow for the year by using all three methods: (a) adjusted accounting profits; (b) cash inflow/cash outflow analysis; and (c) the depreciation tax shield approach. |
Method | Operating Cash Flow |
Adjusted accounting profits | $ |
Cash inflow/cash outflow analysis | |
Depreciation tax shield approach | |
b. | Are the above answers equal? |
Yes No |
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