Question

CSUN Corp. reported EBITDA of $2,767,000 for the fiscal year ended December 31, 2019. During the same period, the company had $189,000 in interest expense, $596,000 in depreciation and amortization expense, and an average corporate tax rate of 25 percent. What was the cash flow to investors from operating activity (CFOA) during 2019

Answer 1

Answer: $2,271,500

Explanation:

Cash flow to investors is:

= EBITDA - Taxes

Taxes = (EBITDA - Depreciation - Interest) * tax rate

= (2,767,000 - 596,000 - 189,000) * 25%

= $495,500

Cash flow to investors from operating activities is:

= 2,767,000 - 495,500

= $2,271,500