Your pro forma income statement shows sales of , cost of goods sold as , depreciation expense of , and taxes of due to a tax rate of . What are your pro forma earnings? What is your pro forma free cash flow?

Answer and Explanation:

The computation is shown below:  

Particulars       Amount($)

Sales               1,033,000

Less:- Cost of goods sold  (503,000)

Gross Profit      530,000

Less:- Depreciation   (103,000)

EBIT               427,000

Taxes [40% of 427000]   (170,800)

Earnings   256,200

1]Proforma earnings = $256200

2]Proforma free cash flow = Earnings + Depreciation

= $256,200 + $103,000

= $359,200

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