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Earnings Before Taxes, Operating Cash Flow, and Operating Income

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During 1998, the Senbet Discount Tire Company had gross sales of $1 million. The firm's cost of goods sold and selling expenses were $300,000 and $200,000, respectively. These figures do not include depreciation. Senbet also had notes payable of $1 million. These notes carried an interest rate of 10%. Depreciation was $100,000. Senbet's tax rate in 1998 was 35%.

a. What was Senbet's net operating income?
b. What were the firms earnings before taxes?
c. What was Senbet's net income?
d. What was Senbet's operating Cash Flow?

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Solution Summary

This solution shows step-by-step calculations to determine the net operating income, earnings before taxes, net income and operating cash flow for Senbet Discount Tire Company.

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Gross Sales = 1,000,000

Cost of goods sold = 300,000
Selling Expenses = 200,000
Depreciation = ...

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