During 2010, Raines Umbrella Corp. had sales of $730,000. Cost of goods sold, administrative and selling

During 2010, Raines Umbrella Corp. had sales of $730,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $450,000, $90,000, and $160,000, respectively. In addition, the company had an interest expense of $92,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)

 

a.	What is Raines’s net income for 2010? (Input the amount as a positive value.)

 

Net loss

$

b.	What is its operating cash flow?

   

Operating cash flow

$

Explanation:

a.

Income Statement
Sales	$	730,000
COGS		450,000
A&S expenses		90,000
Depreciation		160,000
EBIT	$	30,000
Interest		92,000
Taxable income	–$	62,000
Taxes (35%)		0
Net income (loss)	−$	62,000

 
b.

OCF = EBIT + Depreciation − Taxes = $30,000 + 160,000 − 0 = $190,000