What is the cash flow after tax using the CFAT formula?
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Revenues increase by 400,000, cash operating expenses increase by 180,000, and depreciation increases by 45,000. The tax rate is 34%.
a) Calculate the cash flow after tax using the formula that CFAT is operating cash flows after tax plus the depreciation tax shield.
b) Calculate the cash flow after tax using the formula that CFAT is net income plus depreciation.
c) Should the answers to a and b be the same?
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Solution Summary
The solution shows step-by-step calculations for cash flow after tax (CFAT).
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(R) Revenue - 400,000
(E) Cash Op.Exp - (180,000)
Operating Profit - 220,000
(D) Depreciation - (45000)
...
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