Question

During the year, RIT Corp. had sales of $565,600. Costs of goods sold, and depreciation expenses were $476,000, and $42,800, respectively. In addition, the company had an interest expense of $112,000 and a tax rate of 22 percent. What is the operating cash flow for the year

Answer 1

Cash flows from Operating activities is $30800

Step-by-step explanation:

The first thing that we will calculate is the Net Profit for the year thereafter we will calculate the operating cash flow for the year.

Step 1: Calculate is the Net Profit for the Year

Sales $5,65,600

Less: Cost of Goods Sold ($4,76,000)

Gross margin $89,600

Less: Admin and Selling expenses ($58800)

Less: Depreciation ($42,800)

Less: Interest expense ($112,000)

Net income before tax (124000)

Less: tax -

Net income after tax ($1,24,000)

Step 2: Now we will calculate the Cash flow from Operating activities

Net income after tax ($1,24,000)

Add: Depreciation $42,800

Add: Interest $1,12,000

Cash flow from Operating activities $30800