The Rogers Corporation has a gross profit of $799,000 and $281,000 in depreciation expense. The Evans Corporation also has $799,000 in gross profit, with $47,200 in depreciation expense. Selling and administrative expense is $211,000 for each company. a. Given that the tax rate is 40 percent, compute the cash flow for both companies. b. Calculate the difference in cash flow between the two firms.
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
The Rogers Corporation has a gross profit of $799,000 and $281,000 in
a. Given that the tax rate is 40 percent, compute the cash flow for both companies.
b. Calculate the difference in cash flow between the two firms.
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