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8 September, 14:05

Ridiculousness, Inc., has sales of $49,000, costs of $22,600, depreciation expense of $2,150, and interest expense of $1,900. If the tax rate is 21 percent, what is the operating cash flow, or OCF?

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  1. 8 September, 17:26
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    Answer: $21,706.50

    Explanation:

    Given that,

    Sales = $49,000

    costs = $22,600

    Depreciation expense = $2,150

    Interest expense = $1,900

    Tax rate = 21%

    EBIT = Sales - costs - Depreciation expense

    = $49,000 - $22,600 - $2,150

    = $24,250

    Profit before tax = EBIT - Interest expense

    = $24,250 - $1,900

    = $22,350

    Net Income = Profit before tax - Tax (21% of Profit before tax)

    = $22,350 - $4,693.50

    = $17,656.50

    Operating cash flow = EBIT - Tax + Depreciation expense

    = $24,250 - $4,693.50 + $2,150

    = $21,706.50
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Home » Business » Ridiculousness, Inc., has sales of $49,000, costs of $22,600, depreciation expense of $2,150, and interest expense of $1,900. If the tax rate is 21 percent, what is the operating cash flow, or OCF?
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