Your pro forma income statement shows sales of 1,000,000, cost of goods sold as 500,000, depre

Question

Your pro forma income statement shows sales of  1,000,000, cost of goods sold as  500,000, depre

Accepted Answer

First, we need to calculate the operating income (also known as EBIT u002D Earnings Before Interest

Your pro forma income statement shows sales of $$\$ 1,000,000$$, cost of goods sold as $$\$ 500,000$$, depreciation expense of $$\$ 100,000$$, and taxes of $$\$ 160,000$$ due to a tax rate of $40 \%$. What are your pro forma earnings? What is your pro forma free cash flow?