The owner of a bicycle repair shop forecasts revenues of $192,000 a year. Variab
ID: 2755981 • Letter: T
Question
The owner of a bicycle repair shop forecasts revenues of $192,000 a year. Variable costs will be $58,000, and rental costs for the shop are $38,000 a year. Depreciation on the repair tools will be $18,000. The tax rate is 30%.
Calculate 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.
The owner of a bicycle repair shop forecasts revenues of $192,000 a year. Variable costs will be $58,000, and rental costs for the shop are $38,000 a year. Depreciation on the repair tools will be $18,000. The tax rate is 30%.
Explanation / Answer
Solution:
a.)
Adjusted Accounting Profit
b.
No, the above answers are not equal.
Adjusted Accounting Profit Revenues 192,000 Less: Variable cost 58,000 Less: Depreciation 38,000 Adjusted Accounting Profit 96,000Related Questions
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