Question

Benson, Inc., has sales of $38,530, costs of $12,750, depreciation expense of $2,550, and interest expense of $1,850. The tax rate is 21 percent. What is the operating cash flow, or OCF?

Answer 1

Answer:

Operating Cash flow is $19,440

Explanation:

Operating Cash flow

Sales                         = $38,530

-Costs                        = $12,750

-Depreciation            = $2,550

Operating Income    = $23,230

-Interest Expense     = $1,850

Income before Tax  = $21,380

-Tax                           = $4,490

Net Income               = $16,890

Operating Cash Flow = Net Income + Non-Cash Expenses – Increase in Working Capital

Operating Cash flow = $16,890 + $2,550 - 0

Operating Cash flow = $19,440