Disturbed, Inc., had the following operating results for the past year: sales = $22,673; depreciation = $1,380; interest expense = $1,112; costs = $16,525. The tax rate for the year was 30 percent. What was the company's operating cash flow?

Question

Business

Edith Barrera

30 March, 20:16

Disturbed, Inc., had the following operating results for the past year: sales = $22,673; depreciation = $1,380; interest expense = $1,112; costs = $16,525. The tax rate for the year was 30 percent. What was the company's operating cash flow?

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Phoenix Arellano · Answer 1

Operating cash flow is $3,939

Explanation:

Operating cash flows of a company can be calculated by adding non cash items to the net income earned for the year.

Sales $22,673

Costs ($16,525)

Gross Income $6,148

Depreciation ($1,380)

Interest expense ($1,112)

Income before tax $3,656

Tax 30% ($1,097)

Net Income $2,559

Operating cash flows = Net income + non cash expenses

As we know the depreciation is a non cash expense, so we add it back to net income to calculate the operating cash flows.

Operating cash flows = $2,559 + $1,380 = $3,939