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liraira [26]
3 years ago
15

Tubby Toys estimates that its new line of rubber ducks will generate sales of $7.20 million, operating costs of $4.20 million, a

nd a depreciation expense of $1.20 million. If the tax rate is 30%, what is the firm’s operating cash flow?
a. Calculate the operating cash flow for the year by using all three methods:
(a) adjusted accounting profits;
(b) cash inflow/cash outflow analysis; and
(c) the depreciation tax shield approach. (Enter your answers in millions rounded to 2 decimal places.) Method Cash Flow Adjusted accounting profits $ million Cash inflow/cash outflow analysis million Depreciation tax shield approach million
Business
1 answer:
mixer [17]3 years ago
8 0

Answer:

$2.46 million.

Explanation:

Profit before tax:

= Sales - Variable costs - Depreciation

= $7.20 - $4.20 - $1.20

= $1.80 million

Net income = Profit before tax - Tax

                   = $1.80 million - (30% × $1.80)

                   = $1.80 million - $0.54 million

                   = $1.26 million

(1) Adjusted accounting profits method:

= Net income + Depreciation

= $1.26 + $1.2

= $2.46 million

(2) Cash inflow/Cash outflow method:

= Sales - Cash expenses - Tax

= 7.2 - 4.2 - 0.54

= $2.46 million

(3) Depreciation tax shield method:

= [(Sales - Costs) × (1-Tax rate)] + (Depreciation × Tax rate)

= [(7.2 - 4.2) × (1 - 30%)] + (1.20 × 30%)

= $2.46 million

Therefore, operating cash flow from all the three method is $2.46 million.

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Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $480,000, va
marin [14]

Answer:

If 41,000 of costs will remain, it is more convenient to maintain the gloves and mittens line. It gives the possibility to keep working, maintain workers and try to make it to positive profit.

Explanation:

Giving the following information:

Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $480,000, variable expenses of $364,000, and fixed expenses of $150,000. Therefore, the gloves and mittens line had a net loss of $34,000. If Gator eliminates the line, $41,000 of fixed costs will remain.

Sales= 480,000

Variable expense= 364,000

Fixed expense= 150,000

Profit= -34,000

If 41,000 of costs will remain, it is more convenient to maintain the gloves and mittens line. It gives the possibility to keep working, maintain workers and try to make it to positive profit.

6 0
3 years ago
Although True Ion Inc. and One Electro Inc. operate in the same consumer electronic industry, True Ion Inc. has better sales and
Degger [83]

Answer:

The correct answer is B. resource heterogeneity.

Explanation:

The theory of resources and capabilities states that organizations are different from each other based on the resources and capabilities they have at a given time, as well as the different characteristics of the same and that these resources and capabilities are not available to all companies Under the same conditions. This theory allows us to direct the internal analysis towards the most relevant aspects of the social interior of the organization, in relation to the external analysis performed and as a basis for the general strategic approach and subsequent human resources. It is also a tool that allows you to determine the internal strengths and weaknesses of the organization. And according to this theory, the only way to achieve sustainable competitive advantages is through the development of distinctive capabilities.

7 0
3 years ago
A homeowner sued a plumber for damages resulting from the plumber's allegedly faulty installation of water pipes in her basement
Leona [35]

Answer: The correct answer is YES it is admissible as evidence of the plumber's fault.

Explanation: An Evidence has probative value if it tends to prove an issue. The testimony of the homeowner of the regarding the plumber's response is a party admission. It is admissible as a hearsay exemption under Rule 801(d)(2)(A) which explains that a statement or statemens made by a party in a case cannot be excluded as hearsay when offered against him by the opponent. As such, the statement is a probative evidence.

4 0
3 years ago
For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as foll
ch4aika [34]

Answer:

$5,225

Explanation:

Calculation for What should Tringali report as its deferred income tax liability as of the end of its first year of operations

Using this formula

Deferred income tax liability=Temporary difference-depreciation*Tringali's tax rate

Let plug in the formula

Deferred income tax liability= $20,900 * 25%.

Deferred income tax liability=$5,225

Therefore What Tringali should report as its deferred income tax liability as of the end of its first year of operations is $5,225

3 0
3 years ago
Entrepreneurs and other producers accept risks because they hope to earn _____.
Gnom [1K]
Entrepreneurs and other producers accept risks because they hope to earn PROFIT.

Every businesses are set up for the purpose of earning profits. Every venture has its accompanying risks of failure but if everything goes right, then the pay-off will be worth it. 

High risks business also have high potential of generating high profit. 
7 0
3 years ago
Read 2 more answers
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