Jack's Shoes has net income of $19,600 in 2015 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

To calculate the operating cash flow, we need to start with net income and adjust for any non-cash expenses, changes in current assets, and changes in current liabilities. Here's the calculation:

Net income: $19,600
Add back depreciation: +$420
Subtract tax paid: -$8,650
Add back loan interest: +$650
Subtract loan principal repaid: -$4,200

Operating cash flow: $20,670 (option C)

Jack's Shoes Has Net Income of $19,600 in 2015 and Owes