Question

find the operating cash flow for the year for Harper brothers, Inc. if it has sales revenue of $316,000,000, cost of goods sold of $138,400,000, sales and administrative of $40,700,00, depreciation expense of $63,900,000, and a tax rate of 40%. the operating cash flow is

Answer 1

Operating Cash Flow = Net Income after depreciaiton and taxes + Depreciation Expense

To calculate operating cash flow, first of all we need to calculate the Net Income after depreciation and taxes and then add back Depreciation Expense to Net Income. Reason to add back depreciation expense is, it is a non cash item and does not involve any cash outflow.

Calculation of Operating Cash Flow

	$$
Sales Revenue	$316,000,000
Less: Cost of Goods Sold	($138,400,000)
Less: Sales and administrative expense	($40,700,000)
Less: Depreciation Expense	($63,900,000)
Income before tax	$73,000,000
Less: Tax Expense @ 40%	($29,200,000)
Net Income	$43,800,000
Plus: Depreciation Expense	$63,900,000
Operating Cash Flow	$107,700,000

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