An example I was looking at says: Let’s say you have a non-cash expense of $10 and a tax rate of 40%. Your Net Income decreases by $6 as a result... but then you add back the entire non-cash expense of $10 on the CFS so that your cash goes up by $4.
Why does Net Income decrease by $6? Which IS item changes would cause this? Thanks in advance!
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EBIT is down $10. Net Income = (1-40%)*EBIT
So if EBIT is down $10, Net Income is down 0.6*10
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