Finance Assignment | Top Essay Writing
March 17th, 2020
Depreciation and accounting cash flow A firm has gathered the following data for its current year’s operations. The firm has only one asset, which has a 3-year recovery period.
The cost of the asset a year ago was $165,000. The depreciation rate is 45%. Accruals Current assets Interest expense Sales revenue Inventory Total costs before depreciation, interest, and taxes Tax rate on ordinary income $ 12,500 135,000 13,550 420,000 82,300 295,000 40 a. Calculate the firm’s operating cash flow for the current year (see Equations 4.2). b. Why is it important to add back noncash items such as depreciation when calculating cash flows? Get Finance homework help today