Question

connect FINANCE Question 6 of 40) > value: 2.50 points MC Qu. 58 Hot and Cold has annual sales... Hot and cold has annual sales of $982,000, annual depreciation of $127000, and not working capital of $243.000. The percent and the profit margin is 6 percent. The firm has no interest expense. What is the amount of the operating cash flow? O $268.480 $210.220 $185.920 O $98.520 $691300 References Multiple Choice MacBook Air WERTY

Answer 1

We are given the sales = 982000

Profit margin is 6%

So net income = profit margin x sales

So net income = 0.06 x 982000

So net income = 58920

As depreciation is non cash expense we add it to the net income to get the operating CF

Operating CF = 58920+127000 = 185920

We are given the net working capital but not the change in same, so we can't say that it was all invested in in this year so we dont add it to find the OCF

So the correct answer is the 3rd option