Question

Use the information below to calculate Operating Cash Flow.

Sales	200
COGS	150
General and Admin Expense	20
Depreciation	10
Interest	10
Taxes	4

Answer 1

Operating cash flow = Net Income + Non Cash expense - increase in Working capital
Net Income = SALES -COGS - GENERAL AND ADMIN EXPENSE - DEPRECIATION - INTEREST - TAXES
NET INCOME = 200 -150 -20 -10 -10 -4
NET INCOME = 6

Operating cash flow = Net income + depreciation
Operating cash flow = 6 + 10
Operating cash flow =16

Depreciation is a non cash expense.

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