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27 October, 23:31

Le Place has sales of $439,000, depreciation of $32,000, and net working capital of $56,000. The firm has a tax rate of 34 percent and a profit margin of 6 percent. The firm has no interest expense. What is the amount of the operating cash flow?

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  1. 27 October, 23:35
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    Sales$439,000

    Profit Margin = 6% x $439,000 = $26,340

    Tax liability = 34% x $26,340 = $8,956.

    Cash flow from operations:

    Net income $26,340

    Add depreciation $32,000

    Deduct net working capital changes - $56,000

    Deduct tax liability $8,956

    Cash flow from operating activities - $6,616
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