Question

For the year, Jensen's has depreciation of $2,058, dividends paid of $125, interest expense of $382, an addition to retained earnings of $3,408, and an increase in common stock of $2,500. The total tax rate is 21 percent. What is the operating cash flow

Answer 1

Answer:

$5,973

Explanation:

The computation of operating cash flow is seen below;

Net income = $125 + $3,408 = $3533

Net income $3,533 - Interest expense $382 - Depreciation $2,058 = EBIT $1,093

Tax = 21% × $1,093 = $229.53

Operating cash flow = $1,093 + $2,058 + $2,700 - $229.53 = $5,973