Question

31.Outdoor Sports paid $12,500 in dividends and $9,310 in interest over the past year. Sales totaled $361,820 with costs of $267,940. The depreciation expense was $16,500 and the tax rate was 35 percent. What was the amount of the operating cash flow

Answer 1

Answer:

$70,056

Explanation:

Per the above information, we need to calculate first, the Earnings before interest and tax (EBIT).

Sales

$361,820

Less: costs

($267,940)

Less: Depreciation expense

($16,500)

Earnings before interest and tax (EBIT)

$77,380

The next step is to calculate the applicable tax rate.

Tax [$77,380 - $9,310] × 0.35

$23,824.50

We will then calculate the Operating cash flow.

Earnings before interest and tax (EBIT)

$77,380

Add back depreciation expense

$16,500

Less tax

($23,824.50)

Operating cash flow (OCF)

$70,056

Therefore, the amount of operating cash flow is $70,056.