posted by Ashley on .
Sheryl’s Shipping had sales last year of $15,000. The cost of goods sold was $7,500, general and administrative expenses were $2,000, interest expenses were $1,500, and depreciation was $2,000. The firm’s tax rate is 30%.
a. What are the earnings before interest and taxes?
b. What is net income?
c. What is cash flow from operations?
Earnings before interest and taxes $ 1500
Net income $650
Cash flow from operations 1650
Operating cash flow is calculated by a relatively simple equation:EBIT (earnings before interest and taxes)+ Depreciation- Taxes.