Saturday, June 16, 2007

Formula For Determining Cash Flow After Taxes

Just a quick formula to share . . .

Here is how you determine cash flow AFTER taxes:

Take your NET OPERATING INCOME

(subtract) - the ANNUAL DEBT SERVICE

this equals = your CASH FLOW BEFORE TAXES

now, (subtract) - the TAX LIABILITY (savings)

this equals = your CASH FLOW AFTER TAXES!!!!!

With this information, you can perform an investment analysis on a property you are considering acquiring on either a before-tax basis, or an after-tax basis.

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