Question

Tax table Calculations used for taxes =22250+((199250-100000)*0.39)

If a corporation’s taxable income is	It pays that amount on the base of the bracket	Plus this percentage on the excess over the base	Average tax rate at top of bracket
Up to 50,000	0	15%	15.0%
50,000-75,000	7,500	25	18.3
75,000-100,000	13,750	34	22.3
100,000-335,000	22,250	39	34.0
335,000-10,000,000	113,900	34	34.0
10,000,000-15,000,000	3,400,000	35	34.0
15,000,000-18,333,333	5,150,000	38	35.0
Over 18,333,333	6,416,667	35	35.0

Can you please check my operating cash flow part? Answer is incorrect

1.       ABC Inc. 2018 sales are $1,100,000. Operating costs (excluding depreciation) are 70% of sales. Net fixed assets are $205,000. Depreciation amounted to 15% of net fixed assets. Interest expenses are $100,000. The tax bill must be calculated using the corporate income tax table in the text, and ABC Inc. paid 8% of net income in dividends.                                                                                                                                               

Prepare ABC Inc.’s income statement for 2018:                                                                                                                                 

Sales	1,100,000
Operating costs (excluding depreciation)	1,100.000 X .70=770,000
EBITDA	1,100.00-770,00=330,00
Depreciation	205,000 x .15= 30,750
EBIT	330,000-30,750=299,250
Interest Expense	100,000
EBT	299,250-100,000=199,250
Taxes***	60957.5
Net Income	199250-60957.50=138292.50
Common Dividends	110634
Addition to Retained Earnings	138292.50-11063.40=127229.10
Operating Cash Flow= net income + depreciation	138292.50+30750=169042.50

Answer 1

Can you please check my operating cash flow part? Answer is incorrect

Operating Cash Flow= net income + depreciation(+ -)increase or decrease in current asset/current liabilities

In order to find the Change in Working capital we need to use balance sheet data for current year and previous year.

But in the question balance sheet is not give we may assume there is no increase or decrease in current asset hence we can use Operating Cash Flow= net income + depreciation