Question

Fill in the missing numbers for the following statement of comprehensive income. (Input all amounts as positive values. Omit $ sign in your response.)

Sales	$	728,500
Costs		501,800
Depreciation		88,900
EBIT	$
Taxes (34%)
Net income	$

Calculate the OCF.

OCF           $

What is the CCA tax shield?

CCA tax shield           $

Answer 1

Operating Cash Flow =Net Income+Non cash expenses -Increase In working Capital(here increase in working capital =0)

or Sales -Costs -tax (answer will be the same in both cases)

Net Income=Sales -COGS-Fixed Expenses(depreciation)-Taxes

Particulars	Amount
Sales	728,500
COGS	501,800
Gross profit	226700
Less Depreciation	88900
EBIT	137800
Less Tax@34%	46852
Net Income	90948

Net Income =$90,948

Depreciation(non cash expense) =$88,900

Operating Cash flow(OCF) =$90,948+88,900=179,848

CCA tax shield =Depreciation expense *tax rate

tax rate =34%

Depreciation=$88,900

CCA tax shield =$88,900*34%=30,226