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Unformatted text preview: of $42 million, and total liabilities of $20 million. The interest rate on the companies debt is 6% and its tax rate is 30% . The operating profit margin was 12 percent. What was Operating income Depreciation expense Income taxes After-tax cash flows from operations Increase in current assets (50) Increase in current liabilities 35 Increase in networking capital. Change in gross fixed assets* Firms Free Cash Flows Interest expense ($25) Increase in common stock Dividend Financing Cash Flows ($20) the 2008 operating income and net income?. What was operating returned on assets and returned on equity? Assume the interest must be paid on all of the debt. Operating Income = .12 X $65,000,000 = 7,800,000 Net Income: Operating Income 7,800,000 Minus: Interest expense - (.06 X 20,000,000) = 1,200,000 Taxes: -[.3 X (7,800,000 1,200,000)] = 2,000,000 Net Income 4,600,000 = = .19 or 19% = = .21 or 20%...
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