Question

Benson, Inc., has sales of $38,530, costs of $12,750, depreciation expense of $2,550, and interest expense of $1,850. The tax rate is 21%. What is the operating cash flow, or OCF?

Answer 1

$21,290.1

Step-by-step explanation:

The operating cash flow is computed as seen below;

Sales. $38,530

Less: Costs ($12,750)

$25,780

Less:depreciation ($2,550)

EBIT. $23,230

Less: Interest expense ($1,850)

$21,380

Less : 21% taxes ($4,489.9)

Earnings after taxes $16,890.1

Operating cash flow = EBIT + Depreciation - Taxes

= $23,230 + $2,550 - $4,489.9

= $21,290.1