During 2010, Raines Umbrella Corp. had sales of $850,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $610,000, $110,000 and $140,000, respectively. In addition, the company has an interest expense of $85,000 and a tax rate of 35 percent. (Ignore any tax loss carry-back or carry-forward provisions.)
a. What is Raines' net income for 2010?
b. What is its operating cash flow?
c. Explain your results in (a) and (b)?