Fergus Inc. has sales of $43,000, costs of $19,100, depreciation expense of $2,600, and interest expense...

Question

Question

Fergus Inc. has sales of $43,000, costs of $19,100, depreciation expense of $2,600, and interest expense of $2,100.

If the tax rate is 35%, what is the operating cash flow, or OCF? (Omit $ sign in your response.)

Operating cash flow $

Answer 1

Answer #1

Operating cash flow = Net Income + Depreciation

Net Income = (Sales - Costs - Depreciation - Interest) * (1 - Tax Rate)

= (43000 - 19100 - 2600 - 2100) * (1 - 0.35)

= 12480

Operating cash flow = 12480 + 2600

= 15080

Answer 2

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