Benson, inc., has sales of $44,830, costs of $14,370, depreciation expense of $3,270, and interest expense of $2,390. the tax rate is 23 percent. what is the operating cash flow, or ocf?

Respuesta :

The operating cash flow is $24.756.

Operating cash flow, cash flow provided by operations, cash flow from operations, or free cash flow from operations, refers to the amount of cash a business generates.

Operating cash flow is a measure of the amount of cash generated from a company's normal business operations. Operating cash flow indicates whether a business can generate enough positive cash flow to sustain and grow its operations, if not, the business may need outside funding to expand capital.

Operating cash flow = E bit + depreciation - taxes

Where, Ebit = sales - cost of goods - Depreciation

Here,  sales = $ 44830

Cost = $14,370

Depreciation = $3270

⇒ Ebit = 4480 - 14370 - 3270

            = $27,190

Now, taxes = (ebit - interest expense) × taxes rate

           ( 27,190 - 2390) × 23%

     = 24800 × 0.23

   = $ 5704

Now, Operation cash flow = 27,190 + 3270 - 5704

     = $ 24,756

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