Hot and Cold has annual sales of $847,000, annual depreciation of $47,000, and net working capital of $43,000. The tax rate is 21 percent and the profit margin is 7.3 percent. 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 the Net Income: Net Income = Annual Sales * Profit Margin = $847,000 * 7.3% = $61,831. Then, add Depreciation to get OCF: OCF = $61,831 + $47,000 = $108,831.

Hot and Cold Has Annual Sales of $847,000, Annual Depreciation