Finding sales revenue and operating cash flow?
poncg004 asked:
A company reported its net income at $650,000. Its income statement shows that its operating expenses were $1,500,000 fixed and variable) excluding depreciation and amortization. The depreciation and amortization expense is $300,000 and its tax rate was 35%. What was the sales revenue? What was the operating cash flow?
Johnny Wollschlager
A company reported its net income at $650,000. Its income statement shows that its operating expenses were $1,500,000 fixed and variable) excluding depreciation and amortization. The depreciation and amortization expense is $300,000 and its tax rate was 35%. What was the sales revenue? What was the operating cash flow?
Johnny Wollschlager
Its income statement would look like this:
Sales revenue $2,800,000
less:
Costs & expenses $1,500,000
Depreciation & amortization $300,000
Income before taxes $1,000,000
Income taxes $350,000
Net income $650,000
Operating cash flow is $650k + $300k = $950k
(net income add back non-cash items)
The operating expenses 1500000 gross income statement as follows sales rev *** tax *** operating expenses 1500000 gross income 1000000 300000 1300000 1500000 2800000 the.
A standared Income Stmt would be like: (start from operating Revenue)
Operating Revenue: Unknown
Operating Expense: (1,500,000)
Depreciation: (300,000)
_____________
Earning Before Tax Unknown
Tax 35 % (Unkonwn)
_____________
Net Income $ 650,000
To calculate Earning Before Tax (100%*650,000/65%) = $ 1,000,000
To calculate Tax (1,000,000 x 35%) = $ 350,000
To calculate operating Revenue: 1,000,000 + 300,000 + 1,500,000) = 2,800,00
So,
Operating Revenue: 2,800,000
Operating Expense: (1,500,000)
Depreciation: (300,000)
_____________
Earning Before Tax 1,000,000
Tax 35 % (350,000)
_____________
Net Income $ 650,000
Hope above answer would have helped you. Best of Luck