Mainlines net income-total profit margin and cash flow

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Reference no: EM13974490

Assume that Mainline Homecare, a for-profit corporation, had exactly the same situation as reported earlier (Brandywine Homecare, a not-for-profit business, had revenues of $12 million in 2011. Expenses other than depreciation totaled 75% of revenues, and depreciation expense was $1.5 million. All revenues were collected in cash during the year and all expenses other that depreciation were paid in cash). However, Mainline must pay taxes at a rate of 40% of pretax (operating) income. Assuming that the same revenues and expenses reported for financial accounting purposes would be reported for tax purposes, please answer: a. Construct Mainline 2011 income statement. b. What were Mainlines' net income, total profit margin, and cash flow? c. Now, suppose the company changed its depreciation calculation procedures (still within GAAP) such that its depreciation expense doubled. How would this change affect Mainline's net income, total profit margin and cash flow? d. Suppose the change had halved, rather than doubled, the firm's depreciation expense. Now, what would be the impact on net income, total profit margin and cash flow?

Reference no: EM13974490

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