Question

Your pro forma income statement shows sales of $ 976 comma 000?, cost of goods sold...

Your pro forma income statement shows sales of $ 976 comma 000?, cost of goods sold as $ 486 comma 000?, depreciation expense of $ 95 comma 000?, and taxes of $ 158 comma 000 due to a tax rate of 40 %. What are your pro forma? earnings? What is your pro forma free cash? flow?

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Answer #1

Retained Earnings Statement

Particulars

Amount ($)

Sales

$976,000

Less : Cost of goods sold

$486,000

Less : Depreciation

$95,000

Earnings Before Interest and Taxes [ EBIT]

$395,000

Less : Tax at 40%

$158,000

Projected Retained Earnings

$237,000

Free Cash Flow Statement

Particulars

Amount ($)

Projected Retained Earnings

$237,000

Add Back : Depreciation

$95,000

Add Back : Changes in Net Working Capital

-

Add Back : Capital Expenditures

-

Free Cash Flow

$332,000

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