Question

Determine the cash flows from the firm and the cash flows to investors of the firm. 14. Building an Income Statement During the year, the Senbet Discount Tire Company had gross sales of $757,000. The company's cost of goods sold and selling expenses were $249,800 and $146,000,

Answer 1

1	Income statement
	Gross sales	757000
Less	Cost of goods sold	249800
	Gross profit	507200
Less	Selling expense	146000
Less	Depreciation expense	87000
	Profit before interest	274200
Less	Interest expense	40500	(675000*6%)
	Profit before income tax	233700
Less	Income tax expense	81795
	Net income	151905
2	Operating cash flow
	Net income	151905
Add	Depreciation	87000
	Operating cash flow	238905