Answer:
See below.
Explanation:
We can compute this by making an income statement extract,
Sales 705,000
Less:
Cost of goods sold (445,000)
Gross profit 260,000
Less: expenses
Admin and selling (95,000)
Depreciation (140,000)
Profit Before interest and tax 25,000
Interest expense 70,000
Profit/Loss after interest (45,000)
Since the Umbrella Corp is running losses, there is no taxable income.
Operating cash flow can be calculated by adjusting net income or losses for the depreciation expense and increases and decreases in the current assets. Since we do not have information about the current assets,
we estimate operating cash floes as,
Operating cash flows = -45,000 + 140,000 = $95,000
where 140 k is the depreciation adjustment.
Hope that helps.
