In: Finance
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?
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)