Question

Benson, Inc., has sales of $43,780, costs of $14,100, depreciation expense of $3,150, and interest expense of $2,300. The tax rate is 25 percent. What is the operating cash flow, or OCF?

Answer 1

Answer:

$23,623

Explanation:

The computation of the operating cash flow is shown below:

Sales       $43,780

Less

Cost        -$14,100

Depreciation -$3,150

EBIT $26,530

Less: Interest expense -$2,300

Profit before tax $24,230

- tax at 25% -$6,058

Net income $18,173

Now the operating cash flow is

= EBIT - tax at 25% + depreciation expense

= $26,530 - $6,058 + $3,150

= $23,623

Answer 2

Operating cash flow is $23,623

Operating cash flow:

Given:

Computation:                                              

Computation table of operating cash flow

Particular                                      Amount  

Amount of sales                          $43,780

Less:

Cost                                             $14,100

Depreciation                                $3,150  

Earning before tax                      $26,530

Less: Interest expense               $2,300

Profit before tax                          $24,230

Less tax at 25%                           $6,058

Net income                                 $18,173

Operating cash flow = Earning before tax  - tax at 25% + depreciation expense

Operating cash flow = $26,530 - $6,058 + $3,150

Operating cash flow = $23,623

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