The Pizza Parlor paid $3,500 in dividends and $17,600 in interest over the past year. Sales totaled $211,800 with costs of $167,900. The depreciation expense was $16,500. The applicable tax rate is 34 percent. What is the amount of the operating cash flow?

Question

Quizplus · Accepted Answer

Operating cash flow is calculated as: (Sales - Costs - Depreciation) * (1 - Tax Rate) + Depreciation. Here, it is ($211,800 - $167,900 - $16,500) * (1 - 0.34) + $16,500 = $40,568.

The Pizza Parlor Paid $3,500 in Dividends and $17,600 in Interest