Company L sold an inventory item to Firm M for $40,000. Company L’s marginal tax rate is 21 percent. In each of the following cases. Required: Compute Company L’s after-tax cash flow from the sale when Firm M’s payment consisted of $10,000 cash and its note for $30,000. The note is payable two years from the date of sale. Company L’s basis in the inventory item was $15,700. b. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment consisted of $5,000 cash and its note for $35,000. The note is payable two years from the date of sale. Company L’s basis in the inventory item was $47,000. c. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment consisted of $40,000 cash. Company L’s basis in the inventory item was $18,000. d. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment consisted of $40,000 cash. Company L’s basis in the inventory item was $44,000
Company L sold an inventory item to Firm M for $40,000. Company L’s marginal tax
rate is 21 percent. In each of the following cases.
Required:
Compute Company L’s after-tax cash flow from the sale when Firm M’s payment
consisted of $10,000 cash and its note for $30,000. The note is payable two years
from the date of sale. Company L’s basis in the inventory item was $15,700.
b. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment
consisted of $5,000 cash and its note for $35,000. The note is payable two years
from the date of sale. Company L’s basis in the inventory item was $47,000.
c. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment
consisted of $40,000 cash. Company L’s basis in the inventory item was $18,000.
d. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment
consisted of $40,000 cash. Company L’s basis in the inventory item was $44,000
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INTRODUCTION:
Net cash flow is the amount of income earned or lost during a given time period, generally one or more reporting periods. This concept is used to determine a company's short-term financial viability, which is defined as its capacity to create cash.
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