Ask Question
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

+5
Answers (1)
  1. 23 July, 19:00
    0
    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
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “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 ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers