During 2014, Raines Umbrella Corp. had sales of $790,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $610,000, $85,000, and $190,000, respectively. In addition, the company had an interest expense of $52,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)

a. What is Raines's net income for 2014? (Do not round intermediate calculations. Input the amount as a positive value.) $

b. What is the company's operating cash flow? (Do not round intermediate calculations.) Operating cash flow $

Question

Business

Kasey Bird

24 February, 01:19

During 2014, Raines Umbrella Corp. had sales of $790,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $610,000, $85,000, and $190,000, respectively. In addition, the company had an interest expense of $52,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)

a. What is Raines's net income for 2014? (Do not round intermediate calculations. Input the amount as a positive value.) $

b. What is the company's operating cash flow? (Do not round intermediate calculations.) Operating cash flow $

+3

Answers (1)

Know the Answer?

Lorelei Roach · Answer 1

(a) - $147,000

(b) $95,000

Explanation:

(a) EBIT:

= Sales - Cost of goods sold - Administrative and selling expenses - Depreciation expense

= $790,000 - $610,000 - $85,000 - $190,000

= - $95,000

EBT = EBIT - Interest expense

= - $95,000 - $52,000

= - $147,000

Net Income = EBT - Tax expense

= - $147,000 - $0

= - $147,000

(b) company's operating cash flow:

= EBIT + Depreciation Expense

= - $95,000 + $190,000

= $95,000