ABC Inc. has sales of $44,500, costs of $19,400, depreciation expense of $2,900, and interest expense...

ABC Inc. has sales of $44,500, costs of $19,400, depreciation expense of $2,900, and interest expense of $2,400. If the tax rate is 35%, what is the operating cash flow, or OCF? (Omit $ sign in your response.)

Expert Solution

Income Statement
Particulars	$
Sales	44,500
Less: Costs	19,400
Gross Margin	25,100
Less: Depreciation	2,900
Income before tax	22,200
Less: Tax at 35%	7,770
Net Income	14,430
Add back Depreciation*	2,900
Operating cash flow (OCF)	17,330

* We add back depreciation because it is a non-cash operating expense.
** We do not include interest expense because it is a financing expense and not an operating expense.

Excel formulas used:

jeff jeffy answered 3 years ago

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