Pompeii, Inc., has sales of $50,000, costs of $23,000, depreciation expense of $2,250, and interest expense of $2,000. If the tax rate is 23 percent, what is the operating cash flow, or OCF

Question

Abram Curtis

Business

23 July, 18:32

Pompeii, Inc., has sales of $50,000, costs of $23,000, depreciation expense of $2,250, and interest expense of $2,000. If the tax rate is 23 percent, what is the operating cash flow, or OCF

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Answers (1)

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Alberto Leach · Answer 1

operating cash flow = $21307.5

Explanation:

given data

sales = $50,000

costs = $23,000

depreciation expense = $2,250

interest expense = $2,000

tax rate = 23 percent

solution

we get here operating cash flow for that

EBIT = Sales - Costs - Depreciation ... 1

EBIT = $50,000 - $23,000 - $2,250

EBIT = $24750

and taxes is

taxes = tax rate * EBIT ... 2

taxes = 0.23 * $24750

taxes = $5692.5

so here operating cash flow that is

operating cash flow = EBIT + Depreciation - Taxes ... 3

operating cash flow = $24750 + $2,250 - $5692.5

operating cash flow = $21307.5