Explore BrainMass

Explore BrainMass

    Cole Furnaces

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The solution discusses Cole furniture's EBIT.

    Last year Cole Furnaces had $5,000,000 in operating income (EBIT). The company had a net depreciation expense of $1,000,000 and an interest expense of $1,000,000; its corporate tax rate was 40%. The company has $14,000,000 in operating current assets and $4,000,000 in operating current liabilities; it has $15,000,000 in net plant and equipment. It estimates that it has an after-tax cost of capital of 10%. Assume that Cole's only noncash item was depreciation.

    © BrainMass Inc. brainmass.com June 3, 2020, 10:46 pm ad1c9bdddf
    https://brainmass.com/business/accounting/cole-furnaces-249476

    Attachments

    Solution Preview

    Last year Cole Furnaces had $5,000,000 in operating income (EBIT). The company had a net depreciation expense of $1,000,000 and an interest expense of $1,000,000; its corporate tax rate was 40%. The company has $14,000,000 in operating current assets and $4,000,000 in operating current liabilities; it has $15,000,000 in net plant and equipment. It estimates that it has an after-tax cost of capital of 10%. Assume that Cole's only noncash ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer what was the company's net income for the year.

    $2.19

    ADVERTISEMENT