Ann's Custom Catering has sales of $214,000, depreciation of $9,000, and net working capital of $16,000. The firm has a tax rate of 34% and a profit margin of 7%. The firm has no interest expense. What is the amount of the operating cash flow?

Question

Quizplus · Accepted Answer

Operating Cash Flow (OCF) can be calculated using the formula: OCF = Net Income + Depreciation. First, calculate Net Income by applying the profit margin to sales: Net Income = Sales * Profit Margin = $214,000 * 7% = $14,980. Then, add Depreciation to Net Income to find OCF: OCF = $14,980 + $9,000 = $23,980.

Ann's Custom Catering Has Sales of $214,000, Depreciation of $9,000