INCOME STATEMENT APPROACH

INCOME STATEMENT APPROACH - Income Statement Approach...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Income Statement Approach Operating Cash Flow Operating Cash Flow equals $755. Explantion: Operating Cash Flow = EBIT + Depreciation - Taxes Where: Earnings Before Interest and Taxes (EBIT) = $680, Depreciation = $120, and Taxes = $45. Thus, Operating Cash Flow = $680 + $120 - $45 = $755 Capital Spending Capital Spending equals $90. Explantion: Capital Spending = Ending Net Fixed Assets - Beginning Net Fixed Assets + Depreciation Where: Ending Net Fixed Assets = Net Fixed Assets (2011) = $1600, Beginning Net Fixed Assets = Net Fixed Assets (2010) = $1630, and Depreciation = $120. Thus, Capital Spending = $1600 - $1630 + $120 = $90 Addition to Net Working Capital Addition to Net Working Capital equals $-40. Explantion: Addition to Net Working Capital = Ending Net Working Capital - Beginning Net Working Capital Where: Ending Net Working Capital = Total Current Assets (2011) - Total Current Liabilities (2011), Beginning Net Working Capital = Total Current Assets (2010) - Total Current Liabilities
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 2

INCOME STATEMENT APPROACH - Income Statement Approach...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online