Shelley's Quilt Shop has annual sales of $682,000 and a profit margin of 6%. The annual depreciation expense is $43,001. What is the amount of the operating cash flow if Jenny's has no long-term debt?

Question

Quizplus · Accepted Answer

Operating cash flow is calculated as net income plus depreciation. Net income is sales multiplied by the profit margin, which is $682,000 * 6% = $40,920. Adding the depreciation expense of $43,001 gives an operating cash flow of $83,921, which rounds to $83,920.

Shelley's Quilt Shop Has Annual Sales of $682,000 and a Profit