Question

Last year Curative Technologies Inc. reported after-tax earnings of $23 million. Included in the expenses were depreciation of $3.7 million and interest expenses of $2.9 million. The year-end balance sheets shows an increase in deferred taxes of $2.6 million to a total of $14.2 million. What is Curative Technologies' after-tax cash flow for last year? Assume a marginal tax rate of 40%.

Answer 1

Answer:

$29.3 million

Explanation:

Given that,

After-tax earnings = $23 million

Depreciation = $3.7 million

Interest expenses = $2.9 million

Increase in deferred taxes = $2.6 million

Curative Technologies' after-tax cash flow for last year:

= After-tax earnings + Depreciation + Increase in deferred taxes

= $23 million + $3.7 million + $2.6 million

= $29.3 million