Moby D Corporation has sales of $4,061,016; income tax of $452,834

Moby D Corporation has sales of $4,061,016; income tax of $452,834; the selling, general and administrative expenses of $217,215; depreciation of $352,381; cost of goods sold of $2,614,117; and interest expense of $158,446. Calculate the amount of the firm’s after-tax cash flow from operations?

Expert Solution

Given Information

Sales = $4,061,016

Income tax = $452,834

Selling, general and administrative expenses - $217,215

Depreciation = $352,381

Cost of goods sold = $2,614,117

Interest expense = $158,446

Cash Flow from Operations (CFO) represents the cash generated from sales and the cash used in the production process

Cash Flow from Operations (CFO) = Sales –COGS (Cost of Goods Sold) - Selling, general and administrative expenses (SG&A) – Interest expense – tax payments

Note – Depreciation is not taken into account when calculating CFO as it is a non-cash expense i.e. no cash outflow happens from the Company

Putting in the values

CFO = $4,061,016 - $2,614,117 - $217,215 - $158,446 - $452,834

=> Cash Flow from Operations (CFO) = $618,404 (Answer)

jeff jeffy answered 1 year ago

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