What is cash flow net of tax?
I view income net of tax as the money spent without the earnings tax savings when the quantity is insurance deductible on the corporation’s earnings tax return.
To illustrate this, let’s assume that a U.S. organization pays a combined state and federal earnings tax rate of 40% on its last rise of earnings. If this organization spends an additional $10,000 for a tax insurance deductible company cost, it’s subject to taxes earnings will decrease by $10,000. This means that the organization will save paying $4,000 in duty ($10,000 less of subject to taxes earnings being subject to taxes at 40%).
In this situation, the income net of tax is $6,000 consisting of the $10,000 bought the company cost without the $4,000 of duty that will not have to get paid.
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