Net Income and OCF [LO2] During 2009, Raines Umbrella Corp. had sales of S730,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $580,000, $105,000, and $135,000, respectively. In addition, the company had an interest expense of 575,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) a. What is Raines's net income for 2009? b. What is its operating cash flow? c. Explain your results in (a) and (b).
Net Income and OCF [LO2] During 2009, Raines Umbrella Corp. had sales of S730,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $580,000, $105,000, and $135,000, respectively. In addition, the company had an interest expense of 575,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) a. What is Raines's net income for 2009? b. What is its operating cash flow? c. Explain your results in (a) and (b).
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Net Income and OCF [LO2] During 2009, Raines Umbrella Corp. had sales of
S730,000. Cost of goods sold, administrative and selling expenses, and depreciation
expenses were $580,000, $105,000, and S135.000, respectively. In addition, the
company had an interest expense of $75,000 and a tax rate of 35 percent. (Ignore
any tax loss carryback or carryforward provisions.)
a. What is Raines's net income for 2009?
b. What is its operating cash flow?
c. Explain your results in (a) and (b).
Accounting Values versus Cash Flows (L04 In Problem 19, supposc Raines
Umbrella Corp, paid out $25,000 in cash dividends. Is this possible? If spending on
net fixed asseIs and net working capital was zero, and if no new stock was issued
during the year, what do you know about the firm's long-term debt account?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7f9a437c-939f-4030-80d7-5cb89ff699a2%2F0058e62b-6188-44f5-abf4-6f3e945bee50%2Flktm7hj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Net Income and OCF [LO2] During 2009, Raines Umbrella Corp. had sales of
S730,000. Cost of goods sold, administrative and selling expenses, and depreciation
expenses were $580,000, $105,000, and S135.000, respectively. In addition, the
company had an interest expense of $75,000 and a tax rate of 35 percent. (Ignore
any tax loss carryback or carryforward provisions.)
a. What is Raines's net income for 2009?
b. What is its operating cash flow?
c. Explain your results in (a) and (b).
Accounting Values versus Cash Flows (L04 In Problem 19, supposc Raines
Umbrella Corp, paid out $25,000 in cash dividends. Is this possible? If spending on
net fixed asseIs and net working capital was zero, and if no new stock was issued
during the year, what do you know about the firm's long-term debt account?
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