easy · Investment Banking accounting
Relative to a case with no depreciation, a company records $20 million of depreciation. Its tax rate is 25%, taxes are paid in cash, and there are no other changes.
What is the impact on net income and cash flow from operations?
- Net income decreases by $20 million; cash flow from operations is unchanged
- Net income decreases by 15 million; cash flow from operations increases by 5 million
- Net income is unchanged; cash flow from operations decreases by $20 million
- Net income decreases by 15 million; cash flow from operations decreases by 15 million