Question:Johnson Manufacturing recently reported $7,250,000 of sales, $1,875,000 of operating costsother than depreciation, and $1,150,000 of depreciation. The company had $200,000 ofoutstanding bonds that carry a 6.00% interest rate, and its federal-plus-state income tax rate was30%. In order to sustain its operations and thus generate future sales and cash flows, the firmwas required to spend $350,000 to buy new fixed assets and to invest $150,000 in net operatingworking capital.What was the firm's free cash flow?

EBIT=Sales−Operating Costs−DepreciationEBIT=7,250,000−1,875,000−1,150,000=4,225,000 Interest…

Answered: Question: Johnson Manufacturing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

2. Hobart Industries is trying to estimate its first-year operating cash flow (att-1) for a proposed project. The financial staff has collected the following information: Projected sales Operating costs Depreciation $3,000,000 1,200,000 450,000 330,000 Interest expense The company faces a 40% tax rate. What is the project's operating cash flow for the first year (t-13? a $1.260,000 b. $ 810,000 € $1,080,000 d. $1,500,000 $1,800,000
Shrives Publishing recently reported $11,500 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 25%. During the year, the firm had expenditures on fixed assets and net operating working capital that totaled $1,550. These expenditures were necessary for it to sustain operations and generate future sales and cash flows. What was its free cash flow?
Cincinnati Deco recently reported $204,500 of sales, $140,500 of operating costs other than depreciation, and $9,250 of depreciation. The company had $35,250 of outstanding bonds that carry a 6.75% interest rate, and its federal-plus-state income tax rate was 21%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to spend $15,250 to buy new fixed assets and to invest $6,850 in net operating working capital. What was the firm's free cash flow?$26,663$23,700$30,403$19.256No correct answer
The firm is contemplating the following (base case): Vehicle acquisition cost $ 48,000 Years of useful life (economic life) 1 Tax rate 25% Required rate of return on equity 11% Required return on debt 6% Debt ratio 40% Annual revenues $ 175,000 Operating expenses (excluding depreciation) $ 115,000 1.Depreciate straight-line over the year of useful life, down to $0 over one year. The maximum dividend is paid at year end. Ignore any working capital effects. Capital charge will be based on the assets at the beginning of each year. What's the times-interest-earned?
This year, Stang Fabrications Inc. has EBIT of $9,080,000, depreciation expenses of $800,000, capital expenditures of $1,000,000, and has increased its net working capital by $450,000. If its tax rate is 25%, what is its free cash flow? The company's free cash flow is $ (Round to two decimal places.)
The firm is contemplating the following (base case): Vehicle acquisition cost $ 48,000 Years of useful life (economic life) 1 Tax rate 25% Required rate of return on equity 11% Required return on debt 6% Debt ratio 40% Annual revenues $ 175,000 Operating expenses (excluding depreciation) $ 115,000 1.Depreciate straight-line over the year of useful life, down to $0 over one year. The maximum dividend is paid at year end. Ignore any working capital effects. Capital charge will be based on the assets at the beginning of each year. What's the P&L?
Excel Online Structured Activity: Income and Cash Flow Analysis The Berndt Corporation expects to have sales of $11 million. Costs other than depreciation are expected to be 80% of sales, and depreciation expected to be $1.1 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Brendt's federal-plus-state tax rate is 40%. Berndt has no debt. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. Set up an income statement. What is Berndt's expected net cash flow? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar. $ b. Suppose Congress changed the tax laws so that Berndt's depreciation expenses doubled. No changes in operations occurred. What is Berndt's expected net cash flow? Round your answer to the nearest…
Renew Life Industries has an EBIT of $28 million, depreciation of $3 million and a tax rate of 38%. Renew Life invests $8 million in fixed assets and $13 million to increase current assets. Accounts payable is expected to increase by $3 million, accruals total $2 million, and liabilities increase to $6 million. Determine the available cash flow.
Delta Products recently reported $4,250,000 of sales, $3,200,000 of operating costs other than depreciation, and $250,000 of depreciation. The company had $750,000 of outstanding bonds that carry a 4.25% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate sales and cash flows in the future, the Delta Products spent $350,000 to buy new fixed assets and to invest $75,000 in net operating working capital. How much free cash flow did Delta Products generate?
Mao Construction recently reported $20.50 million of sales, $12.60 million of operating costs other than depreciation, and $3.00 million of depreciation. It had $8.50 million of bonds outstanding that carry a 7.0% interest rate, and its federal-plus-state income tax rate was 40%. What was Mao's operating income, or EBIT, in millions? * $4.90 $3.97 $3.57 $4.41 O $3.21
C) a decrease of $12 D) an increase of $60,000 20. In a particular year a certain investment project generated revenue of $200,000. Other expenses (excluding depreciation and interest expense) totaled $100,000. Depreciation expense was $50,000 and interest expense was $10,000. The firm faces a tax rate of 21%. What is the project's after-tax operating cash flow in this year? A) $89,500 B) $81,600 C) $129,000 D) $79,000 ting decision and must

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS