Calculating OCF. Hailey, Inc., has sales of $38,530, costs of $12,750, depreciation expense of $2,550, and interest expense of $1,850. If the tax rate is 35 percent, what is the operating cash flow, or OCF?

Question

Rosemary Norris

Business

21 February, 05:09

Calculating OCF. Hailey, Inc., has sales of $38,530, costs of $12,750, depreciation expense of $2,550, and interest expense of $1,850. If the tax rate is 35 percent, what is the operating cash flow, or OCF?

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Abdiel Mayo · Answer 1

Firstly Calculate Net Income by constructing Income statement as follows:

Hailey, Inc.

Income Statement for the year end MM DD, YY

$

Sales = 38,530

-Costs = 12,750

=Gross Income = 25,780

-Depreciation Expense = 2,550

=Operating Income = 23,230

-Interest Expense = 1,850

=Income before Tax = 21,380

-Tax = 7,483

=Net Income = 13,897

Now calculate Operating cash flow using above dа ta:

Operating Cash flow = OCF = Net Income + Non cash expense

OCF = $13,897 + $2,550

OCF = $16,447