Given:
Total sales = $1,479,600
Cost = $914,300
Depreciation = $41,650
Tax rate = 34 %
To find:
The Operating cash flow
Solution:
To calculate the Operating Cash Flow we have to first calculate the EBIT. The required calculation is as follows,
[tex]\text{Operating Cash Flow = Earnings Before Interests and Taxes + Depreciation - Taxes}\\\\ \Rightarrow\text{EBIT = Sales - Cost - Depriciation}\\\\ \Rightarrow \text{EBIT} = \$1,479,600 - \$914,300 - \$41,650 = \$52,3650\\\\ \Rightarrow \text{OCF }=\$52,3650+\$41,650-\$52,3650\times35\%\\\\ \Rightarrow\$52,3650+\$41,650-\$183277.5\rightarrow \$382022.5[/tex]
Therefore, The value of Operating cash flow is $38,2022.5
