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what are the steps to calculating after tax operating cash flows?

what are the steps to calculating after tax operating cash flows?
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Answer #1

Answer:

The steps to calculate after tax operating cash flows:

1. Determine before tax cash flows (PBT)
2. Subtract the tax laibility from PBT
3. The result will be the cash flows after tax (PAT/ Net Income)
4. Then, we will add back non-cash expenses i.e. depreciation and amortization
5. Then, increase in working capital is deducted from the above resultant figure
(For calculating increase in working capital, we will separatly calculate increase in current assets and increase in current liabilities and the deduct both the figures to derive increase in working capital)
6. The resultant figure will be the operating cash flow

Therefore, the formula comes down to:
Operating cash flow = Net Income + Non Cash expenses - Increase in Working Capital

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