Question

Calculate operating cash flow if a firm has sales of $1,000,000, depreciation of $150,000 operating profit (EBIT) of $260,000, interest expense of $50,000, and a tax rate of 30%.

Answer 1

Answer:

Operating cash flow= 297,000

Explanation:

Giving the following information:

EBIT= 260,000

Depreciation= 150,000

Interest= 50,000

t= 0.3

To calculate the cash flow, we need to use the following structure:

EBIT= 260,000

Interest= (50,000)

EBT= 210,000

Tax= (210,000*0.3)= (63,000)

Depreciation= 150,000

Operating cash flow= 297,000