In year four tinker LLC had EBIT of 250 Taxes were 40 and de

In year four, tinker LLC had EBIT of 250. Taxes were 40% and depreciation was 25. What was cash flow in year four?In year four, tinker LLC had EBIT of 250. Taxes were 40% and depreciation was 25. What was cash flow in year four?

Solution

The cash flow in year four is:

Earnings before interest and tax = $250

Less : Tax @40%($250 *40%) = ($100)

Earnings after tax (EAT)    = $150

Add: Depreciation    = $25

Cash flow in year four = $175