Class book: Fundamentals of Corporate Finance by Brealey, Myers, and Marcus Income versus Cash Flow. Butterfly Tractos had $14 million in sales last year. Cost of goods sold was $8 million, depreciation expense was $2 million, interest payment on outstanding debt was $1 million, and the firm's tax rate was 21%. a. what was the firm's net income? b. What was the firm's cash flow? c. what would happen to net income and cash flow if depreciation were increased by $1 million? 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 $1 million and interest expense was $2 million?
Class book: Fundamentals of
Income versus Cash Flow. Butterfly Tractos had $14 million in sales last year. Cost of goods sold was $8 million,
a. what was the firm's net income?
b. What was the firm's cash flow?
c. what would happen to net income and cash flow if depreciation were increased by $1 million?
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 $1 million and interest expense was $2 million?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
