Jack's Shoes has net income of $19,600 in 2018 and owes $8,650 in taxes for the year. The company repaid $4,200 in loan principal and $650 in loan interest during the year. No new funds were borrowed. The depreciation expense is $420. What is the operating cash flow for the year?

Question

Quizplus · Accepted Answer

Operating cash flow can be calculated by starting with net income, then adding back non-cash expenses (like depreciation) and adjusting for changes in working capital (not applicable here). So, the calculation is: $19,600 (net income) + $420 (depreciation) + $650 (loan interest) = $20,670. Taxes and repayment of loan principal do not affect operating cash flow directly.

Jack's Shoes Has Net Income of $19,600 in 2018 and Owes