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Crandall Oil has total sales of $1,100 and costs of $705. Depreciation is $149 and the...

Crandall Oil has total sales of $1,100 and costs of $705. Depreciation is $149 and the tax rate is 35 percent. The firm does not have any interest expense. What is the operating cash flow?

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Expert Solution

Information provided:

Sales= $1,100

Cost= $705

Depreciation= $149

Earnings after tax= Sales – Costs – Depreciation

                                  = $1,100 - $705 - $149

                                  = $246

Net income= Earnings after tax*(1 – tax rate)

                      = $246*(1 – 0.35)

                      = $159.90

Operating cash flow is calculated as:

= Net income + Depreciation

= $159.90 + $149

= $308.90.

      

In case of any query, kindly comment on the solution.

jeff jeffy answered 5 months ago
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