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Gerry Co. has a gross profit of $1,200,000 and depreciation expense of $400,000. Selling and administrative expense is $250,000. Given that the tax rate is 40 percent, compute the cash flow from operations for Gerry Co.

Respuesta :

The cash flow from operations for Gerry Co is $730,000.

  • The following format should be considered:

Gross profit $1,200,000

Less: depreciation $400,000

Less: selling & admin expense -$250,000

EBIT $550,000

Less: taxes (40% of $550,000) $220,000

Net income $330,000

Add: depreciation expense $400,000

Cash flow from operations $730,000

Therefore we can conclude that The cash flow from operations for Gerry Co is $730,000.

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