Answer:
1. Net loss 2010 $15,000
2. Operating cash flow $200,000
Explanation:
1. Net income or loss 2010.
Sales = $900,000
Less cost of goods sold = $575,000
Gross profit = $325,000
Less administrative and selling expense = $125,000
Earnings before interest , tax and depreciation = $200,000
Less depreciation = $145,000
Earnings before interest and tax (EBIT) = $55,000
Less interest expense = $70,000
Earning before tax (EBT) = ($15,000)
Less tax = ($0) since the company is having negative EBT or loss hence no tax.
Net loss $15,000
2. Operating cash flow
= EBIT + depreciation - tax
Where ;
EBIT = Earnings before interest and tax
= $55,000 + $145,000 - ($0)
= $200,000
