Final answer:
The operating cash flow for Master Machines, Inc. for the year 2018 is calculated by adding back depreciation and changes in working capital to the net income. However, the calculated amount of $582.1 does not match any of the provided answer choices, suggesting a possible error in the provided data or an omission of additional adjustments.
Step-by-step explanation:
To calculate the operating cash flow for Master Machines, Inc. for the year 2018, we can use the formula:
- Operating Cash Flow = Net Income + Depreciation + Changes in Working Capital
Firstly, we need to calculate the Net Income for the year 2018:
- Net Income = Sales - COGS - Interest - Tax
- Tax = (Sales - COGS - Interest - Depreciation) * Tax Rate
- Tax = ($1,385 - $910 - $20 - $240) * 34% = $73.9
- Net Income = $1,385 - $910 - $20 - $73.9 = $381.1
Next, we add back the Depreciation for 2018, which is $240, to the Net Income.
Then, we need to calculate Changes in Working Capital (only considering current assets and current liabilities):
- Changes in Working Capital = (Current Assets - Inventory - Current Liabilities) - (Previous Current Assets - Previous Inventory - Previous Current Liabilities)
- Changes in Working Capital = (($165 + $440) - $469) - (($145 + $410) - $380) = $136 - $175 = -$39
Finally, we get the Operating Cash Flow by adding the Net Income, Depreciation, and the negative Changes in Working Capital:
Operating Cash Flow = $381.1 + $240 - $39 = $582.1
However, none of the provided answer choices reflect this calculation. Please make sure the provided data is correct and complete, and no additional adjustments or items are required for the correct computation of the operating cash flow.