Question

Matsumoto Training has sales of 705,000, depreciation of17,600, interest expense of 2,090, costs of144,000, and a tax rate of 21 percent. What is the operating cash flow for the year?

Answer 1

The operating cash flow for the year is $429,286.

Step-by-step explanation:

To calculate the operating cash flow, we need to start with net income. Net income can be calculated by subtracting all expenses from sales revenue. In this case, we have sales of $705,000 and costs of $144,000. So, net income is $705,000 - $144,000 = $561,000.

Next, we need to adjust for non-cash expenses like depreciation. Depreciation is $17,600, so we subtract it from net income: $561,000 - $17,600 = $543,400.

Finally, we need to consider the tax expense. The tax rate is 21 percent, so we multiply the taxable income ($543,400) by 0.21: $543,400 imes 0.21 = $114,114. Subtracting the tax expense from net income gives us the operating cash flow: $543,400 - $114,114 = $429,286.