Answer:
The pro forma earnings are $203,400
The pro forma free cash flow is $308,400
Explanation:
The pro forma income statement shows sales of $966,000, cost of goods sold as $522,000, depreciation expense of $105,000, and taxes of $135,600.
The pro forma earnings = Sales - cost of goods sold - depreciation expense - taxes = $966,000 - $522,000 - $105,000 - $135,600 = $203,400
The pro forma free cash flow = Sales - cost of goods sold - taxes = $966,000 - $522,000 - $135,600 = $308,400
Note: Depreciation is a non-cash accounting expense, so it doesn't involve cash flow.
