Use the information...
7. Use the information in question 6, and apply a tax rate of 40%. What is the NET INCOME available for distribution to the shareholders of this company? b) $25.8 million
Start with EBIT and deduct INTEREST and TAXES (in millions) EBIT$59.0
Less:
INTEREST $16.0 TAXES(40%) 17.2 (59.0 - 16.0) x 0.40
NET INCOME $25.8
8. XYZ Corporation purchases a widget maker for $750,000. The piece of equipment has an estimated useful life of ten years. Using a straight-line depreciation method, the annual amount the company can deduct as an OPERATING COST is: d) $75,000 per year ($750,000 รท 10 years)
CASH FLOW STATEMENT
Sources and uses of funds
The financial statement that is used to show the sources and uses of a company's funds is called a Cash Flow Statement. It also may be called the "Statement of Changes in Financial Position" or the "Sources and Uses Statement," depending on its structure. The analyst uses the Cash Flow Statement to examine the flow of funds into a company and the use of those funds. We will use the terms "funds" and "cash" interchangeably throughout this section.