Ship-to-Shore earned $280,000 after taxes last year. Its expenses included depreciation of $55,000, interest expenses of $40,000, and deferred taxes of $20,000. The company also purchased two new fresh water fishing boats for $40,000 ($20,000) each. What is Ship-to-Shore's after-tax cash flow for last year?
A) $395,000
B) $355,000
C) $315,000
D) $280,000

Question

Quizplus · Accepted Answer

After-tax cash flow can be calculated using the following formula:
Net income + Depreciation + Interest Expense - Change in deferred taxes - Capital expenditures
= $280,000 + $55,000 + $40,000 - ($20,000) - $40,000
= $315,000 - $20,000
= $295,000
Therefore, the after-tax cash flow for last year is $295,000, which is closest to option B, $355,000.

Ship-To-Shore Earned $280,000 After Taxes Last Year