What is the 1 year operating cash flow?
Sales $33,000
Depreciation $10,000
Other operating costs $17,000
Interest expense $4,000
Tax rate 35%
To calculate the 1 year operating cash flow, we need to follow a few steps. Here is how you can arrive at the answer:
Step 1: Calculate EBIT (Earnings Before Interest and Taxes)
EBIT is calculated by subtracting the operating expenses from the sales revenue.
EBIT = Sales - Other operating costs
EBIT = $33,000 - $17,000
EBIT = $16,000
Step 2: Calculate the tax expense
Tax expense is calculated by multiplying the EBIT by the tax rate.
Tax expense = EBIT * Tax rate
Tax expense = $16,000 * 0.35
Tax expense = $5,600
Step 3: Calculate the Net Income
Net Income is calculated by subtracting the tax expense from the EBIT.
Net Income = EBIT - Tax expense
Net Income = $16,000 - $5,600
Net Income = $10,400
Step 4: Calculate the Operating Cash Flow
Operating Cash Flow is calculated by adding the net income to the depreciation expense.
Operating Cash Flow = Net Income + Depreciation
Operating Cash Flow = $10,400 + $10,000
Operating Cash Flow = $20,400
Therefore, the 1 year operating cash flow is $20,400.
This is John B. did I answer this correctly?
33000 - 10,000 - 17000 - 4000 = 2000 @35% = 700 or a net profit of 1300. Now add back the depreciation of $10,000 to get $11,300