Fill in the missing numbers for the following income statement.

Fill in the missing numbers for the following income statement. (Input all amounts as positive values.)

Sales	$	691,900
Costs		446,800
Depreciation		119,400
EBIT	$
Taxes (34%)
Net income	$

Calculate the OCF.

OCF

$

What is the depreciation tax shield?

Depreciation tax shield

$

Explanation:

The OCF for the company is:

OCF = EBIT + Depreciation − Taxes

OCF = $125,700 + 119,400 − 42,738

OCF = $202,362

The depreciation tax shield is the depreciation times the tax rate, so:

Depreciation tax shield = T(Depreciation)

Depreciation tax shield = 0.34($119,400)

Depreciation tax shield = $40,596

The depreciation tax shield shows us the increase in OCF by being able to expense depreciation.