Question

A direct participation program shows the following operation results: Revenues: $3 million Operating expense: $1 million Interest expense: $200,000 Management fees: $200,000 Depreciation: $3 million The cash flow from program operation is

Answer 1

The cash flow from program operation is $1,600,000.

Step-by-step explanation:

Prepare the Cash Flow from Operating Activities Section to determine the cash flow from program operation.

Cash Flow from Operating Activities

Revenue $3,000,000

Less Expenses :

Operating Expenses $1,000,000

Interest expense $200,000

Management fees $200,000

Depreciation $3,000,000 ($4,400,000)

Operating Profit / (Loss) ($1,400,000)

Add Back Depreciation $3,000,000

Operating Cash flow $1,600,000