Question

Ridiculousness, Inc., has sales of $44,000, costs of $20,600, depreciation expense of $1,700, and interest expense of $1,000. If the tax rate is 35 percent, what is the operating cash flow, or OCF

Answer 1

Operating cash flow= 15,155

Step-by-step explanation:

Giving the following information:

Ridiculousness, Inc., has sales of $44,000, costs of $20,600, depreciation expense of $1,700, and interest expense of $1,000.

Tax rate= 35%

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

Sales= 44,000

COGS= (20,600)

Gross profit= 23,400

Depreciation= (1,700)

Interest= (1,000)

EBT= 20,700

Tax= 20,700*0.35= (7,245)

Depreciation= 1,700

Operating cash flow= 15,155