Problem 3-14 Income versus Cash Flow (LO3)
Butterfly Tractors had $15.00 million in sales last year. Costof goods sold was $8.20 million, depreciation expense was $2.20million, interest payment on outstanding debt was $1.20million, andthe firm’s tax rate was 35%.
a. What was the firm’s net income?(Enter your answers in millions rounded to 2 decimalplaces.)
b. What was the firm’s cash flow?(Enter your answers in millions rounded to 2 decimalplaces.)
c. What would happen to net income and cash flow if depreciationwere increased by $1.20 million? (Enter your numericanswers in millions rounded to 2 decimal places. Select\"unaffected\" if the results do not affect thebalance.)
f. What would be the impact on cash flow if depreciation was $1.20million and interest expense was $2.20 million? (Enter yournumeric answer in millions rounded to 2 decimal places. Select\"unaffected\" if the results do not affect thebalance.)
