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16 October, 07:56

During the year, RIT Corp. had sales of $565,600. Costs of goods sold, and depreciation expenses were $476,000, and $42,800, respectively. In addition, the company had an interest expense of $112,000 and a tax rate of 22 percent. What is the operating cash flow for the year

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  1. 16 October, 08:06
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    Cash flows from Operating activities is $30800

    Explanation:

    The first thing that we will calculate is the Net Profit for the year thereafter we will calculate the operating cash flow for the year.

    Step 1: Calculate is the Net Profit for the Year

    Sales $5,65,600

    Less: Cost of Goods Sold ($4,76,000)

    Gross margin $89,600

    Less: Admin and Selling expenses ($58800)

    Less: Depreciation ($42,800)

    Less: Interest expense ($112,000)

    Net income before tax (124000)

    Less: tax -

    Net income after tax ($1,24,000)

    Step 2: Now we will calculate the Cash flow from Operating activities

    Net income after tax ($1,24,000)

    Add: Depreciation $42,800

    Add: Interest $1,12,000

    Cash flow from Operating activities $30800
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