Reference no: EM132739823

At the end of last year, Pink Power Company achieved $ 6 million in revenue (EBITDA). Depreciation expenses were $ 1.2 million, those of interest paid $ 800,000 and the corporate tax rate was 35%. At the end of the fiscal year the company had current assets that totaled $ 12 million, $ 4 million in accounts payable, $ 1.5 million in accumulated debt, $ 1.3 million in other debts payable, and $ 8 million in property, plant and equipment. Sup or n King Power that the company does not have excess cash, debt and equity used to finance its operations , it has no current liabilities and recognizes depreciation periodically.

Problem 1. Determine the net income or loss of the business. Explain how this result can help the manager in making decisions in the company.

Problem 2. Calculate the net working and operating capital. Explain the difference between the two results .

Problem 3. If the company had $ 6 million in property, plant and equipment the previous year and net operating working capital remained constant, what is the cash flow available from the company? Explain how the available flow result helps managers in the financial planning process.