Question

A.) McDonald's has total sales of $2,475,000, costs are $1,480,000, and depreciation is $162,000. The tax...

A.) McDonald's has total sales of $2,475,000, costs are $1,480,000, and depreciation is $162,000. The tax rate is 25 percent. The interest expense is $79,000. What is the operating cash flow?

$972,500

$934,000

$887,500

$852,400

$806,500

B.) McDonald's had beginning net fixed assets of $2,870,000 and ending net fixed assets of $2,741,000. Assets valued at $308,000 were sold during the year. Depreciation was $295,000. What is the amount of net capital spending?

$182,000

$166,000

$194,000

$153,000

$175,000

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Homework Answers

Answer #1
Particulars Amount
Sales 2475000
Less: Costs 1480000
Earning before interest, depreciation and tax 995000
Less: Depreciation 162000
Earning before interest and tax 833000
Less: Interest expense 79000
Earning before tax 754000
Less: Tax @ 25% 188500
Profit after tax 565500
Add: Depreciation expense 162000
Add: Interest expense 79000
Operating cash flow 806500
2) Closing fixed assets = Opening fixed assets + Purchases - Assets sold - Depreciation
2741000 = 2870000 + Purchases - 308000 - 295000
Purchases = 474000
Assets Purchases 474000
Assets sold 308000
Net capital spend 166000
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