Gerry Co. has a gross profit of $1,200,000 and $400,000 in depreciation expense. Selling and administrative expense is $250,000. Given that the tax rate is 40 percent, compute the cash flow for Gerry Co.

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Cash flow is calculated as: Gross Profit - Depreciation - Selling/Admin Expenses - Taxes. Taxes = (Gross Profit - Depreciation - Selling/Admin Expenses) * Tax Rate. Cash Flow = $1,200,000 - $400,000 - $250,000 - [($1,200,000 - $400,000 - $250,000) * 0.40] = $730,000.

Gerry Co Has a Gross Profit of $1,200,000 and $400,000 in in Depreciation