Question

Determine the operating cash flow​ (OCF) for​ Kleczka, LLC., based on the following data. During the year the firm had sales of $ 2 comma 522 comma 000 ​, cost of goods sold totaled $ 1 comma 838 comma 000 ​, operating expenses totaled $ 326 comma 000 ​, and depreciation expenses were $ 247 comma 000 . The firm is in the 24 % tax bracket. ?

Answer 1

Answer:

$519,080      

Explanation:

The operating cash flow is shown below:  

= Earning before interest and taxes + depreciation expense - income tax expense

where,  

Earning before interest and taxes = Sales - cost of goods sold - operating expenses

= $2,522,000 - $1,838,000 - $326,000

= $358,000

The income tax expense would be

= (Sales - costs of goods sold  - operation expenses) × tax rate

= ($2,522,000 - $1,838,000 - $326,000) × 24%

= $85,920

So, the operating cash flow would be

=$358,000 + $247,000 - $85,920

= $519,080      

Note: It is assumed that depreciation expense is included in operating expenses.