Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

XYZ Company, a 'for-profit' business, had revenues of $60 million in 2019. Expenses other than depreciation totaled 55 percent of revenues, and depreciation expense was

image text in transcribed
XYZ Company, a 'for-profit' business, had revenues of $60 million in 2019. Expenses other than depreciation totaled 55 percent of revenues, and depreciation expense was $5.0 million. XYZ Company, must pay taxes at a rate of 25 percent of pretax (operating) income. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. Depreciation originally was $5 million; however, now the company has decided to be more conservative in its depreciation of its capital assets. XYZ now has $2.5 million in depreciation expense instead of $5 million. Based on this change in depreciation expense, what would XYZ 's cash flow be

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

Contemporary Financial Management Fundamentals

Authors: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao

1st Edition

0324015771, 9780324015775

More Books

Students also viewed these Finance questions

Question

5. What are the characteristics of a well-designed dashboard?

Answered: 1 week ago