Question

Disturbed, Inc., had the following operating results for the past year: sales = $22,563; depreciation =...

Disturbed, Inc., had the following operating results for the past year: sales = $22,563; depreciation = $1,360; interest expense = $1,096; costs = $16,515. The tax rate for the year was 40 percent. What was the company's operating cash flow?

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Answer #1

To calculate Operating Cash Flow, First we need to construct an income statement.

Sales $       22,563
Less: Cost $     (16,515)
Less: Depreciation $       (1,360)
EBIT $         4,688
Less: Interest $       (1,096)
Taxable income $         3,592
Less: Taxes ($3,592*40%) $ (1,436.80)
Net income $   2,155.20

Operating Cash Flow = EBIT + Depreciation - Taxes

Operating Cash Flow = $4,688 + $1,360 - $1,436.80

Operating Cash Flow = $4,611.20

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