Fill in the missing numbers in the following income statement: (Do not round intermediate calculations and round your answers to the nearest whole number, e.g. 32.)
Sales $ 644,800
Costs 346,300
Depreciation 97,000
EBIT $
Taxes (30%)
Net income $
What is the OCF? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32.)
What is the depreciation tax shield? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32.)

Question

williamschris9169 williamschris9169

21-11-2019
Business

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Fill in the missing numbers in the following income statement: (Do not round intermediate calculations and round your answers to the nearest whole number, e.g. 32.)
Sales $ 644,800
Costs 346,300
Depreciation 97,000
EBIT $
Taxes (30%)
Net income $
What is the OCF? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32.)
What is the depreciation tax shield? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32.)

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andromache andromache · Answer 1 · 2019-11-21T06:22:53+01:00

Answer:

OCF is $238,050

Depreciation tax shield is $29,100

Explanation:

The computation of the operating cash flow is shown below:

= EBIT + Depreciation - Income tax expense

where,

EBIT = Sales - cost of good sold - depreciation expense

= 644,800 - $346,300 - $97,000

= $201,500

The income tax expense is

= $201,500 × 30%

= $60,450

And, the Depreciation is $97,000

Now put these values to the above formula

So, the value would equal to

= $201,500 + $97,000 - $60,450

= $238,050

The computation of the depreciation tax shield would be

= Tax rate × depreciation expense

= 30% × $97,000

= $29,100

Tundexi Tundexi · Answer 2 · 2022-03-24T13:04:24+01:00

The OCF equals $238,050 and the Depreciation tax shield equals $29,100.

What is the formula for Operating cash flow?

OCF = EBIT + Depreciation - Income tax expense

We are solving for EBIT

EBIT = Sales - cost of good sold - depreciation expense

What is the EBIT?

= 644,800 - $346,300 - $97,000

= $201,500

What is the income tax expense?

= $201,500 × 30%

= $60,450

Given Depreciation is $97,000 and Operating cash flow = EBIT + Depreciation - Income tax expense

What is OCF?

= $201,500 + $97,000 - $60,450

= $238,050

What is depreciation tax shield?

= Tax rate * Depreciation expense

= 30% × $97,000

= $29,100

In conclusion, the OCF equals $238,050 and the Depreciation tax shield equals $29,100.