Webster's has sales of $798,000 and a profit margin of 6.8 percent. The annual depreciation expense is $82,600. What is the amount of the operating cash flow if the company has no long-term debt?

Question

Quizplus · Accepted Answer

Operating Cash Flow (OCF) can be calculated using the formula: OCF = Net Income + Depreciation. First, calculate the Net Income by applying the profit margin to the sales: Net Income = Sales * Profit Margin = $798,000 * 6.8% = $54,264. Then, add the Depreciation Expense to the Net Income to find the OCF: OCF = $54,264 + $82,600 = $136,864.

Webster's Has Sales of $798,000 and a Profit Margin of 6.8