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Problem 3-14 Income versus Cash Flow (LO3) Butterfly Tractors 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%. Required: a. What was the firm's net income? (Enter your answer in millions rounded to 2 decimal places.) b. What was the firm's cash flow? (Enter your answer in millions rounded to 2 decimal places.) c. What would happen to net income and cash flow if depreciation were increased by $1 million? (Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.) f. What would be the impact on cash flow if depreciation was $1 million and interest expense was $2 million? (Enter your numeric answer in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.) a. Net income b. Net cash flow C. f. Net income would be Cash flow would be Cash flow would be million million by by by million million million

Problem 3-14 Income versus Cash Flow (LO3) Butterfly Tractors 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%. Required: a. What was the firm's net income? (Enter your answer in millions rounded to 2 decimal places.) b. What was the firm's cash flow? (Enter your answer in millions rounded to 2 decimal places.) c. What would happen to net income and cash flow if depreciation were increased by $1 million? (Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.) f. What would be the impact on cash flow if depreciation was $1 million and interest expense was $2 million? (Enter your numeric answer in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.) a. Net income b. Net cash flow C. f. Net income would be Cash flow would be Cash flow would be million million by by by million million million

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 3-14 Income versus Cash Flow (LO3) Butterfly Tractors 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%. Required: a. What was the firm's net income? (Enter your answer in millions rounded to 2 decimal places.) b. What was the firm's cash flow? (Enter your answer in millions rounded to 2 decimal places.) c. What would happen to net income and cash flow if depreciation were increased by $1 million? (Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.) f. What would be the impact on cash flow if depreciation was $1 million and interest expense was $2 million? (Enter your numeric answer in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.) a. b. C. f. Net income Net cash flow Net income would be Cash flow would be Cash flow would be million million by by by million million million
Transcribed Image Text:Problem 3-14 Income versus Cash Flow (LO3) Butterfly Tractors 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%. Required: a. What was the firm's net income? (Enter your answer in millions rounded to 2 decimal places.) b. What was the firm's cash flow? (Enter your answer in millions rounded to 2 decimal places.) c. What would happen to net income and cash flow if depreciation were increased by $1 million? (Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.) f. What would be the impact on cash flow if depreciation was $1 million and interest expense was $2 million? (Enter your numeric answer in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.) a. b. C. f. Net income Net cash flow Net income would be Cash flow would be Cash flow would be million million by by by million million million
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