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During fiscal year 2019, Magic Kingdom had sales of $2 million. Its cost of goods sold,...

During fiscal year 2019, Magic Kingdom had sales of $2 million. Its cost of goods sold, selling and general administrative expenses, and depreciation were $1.2 million, $.5 million and $.9 million, respectively. Its 7% semiannual coupon bonds will mature in 10 years, and there is no other debt. The tax rate is 21%, and tax losses cannot be carried forward or back. What is the operating cash flow for Magic Kingdom in fiscal year 2019?  

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Answer #1
Magic Kingdom
Year 2019.
Sales $ 2,000,000.00
Less : Cost of Goods Sold $ 1,200,000.00
Gross Profit $     800,000.00
SGA Expense $     500,000.00
Depreciation expense $     900,000.00
Total Operating Expense $ 1,400,000.00
EBIT =Operating Income/(Loss) $   (600,000.00)
Tax @21% $   (126,000.00)
As Tax loss can not be carried forward or backward, we
need to ignore Tax Loss set off for cash flow calculation
Now Operating Cash flow =EBIT *(1-T) +Depreciation-Chane in Working Capital
We are ignoring Tax , no iformation is there on working capital change
So , Operating cash flow =EBIT+Depreciation=-$600,000+$900,000=$300,000
So operating acsh flow for Magic Kingdom for 2019 is $300,000
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