Assume a firm has no interest expense or extraordinary items.Given this,the operating cash flow can be computed as:
A)EBIT − Taxes.
B)EBIT(1 − Tax rate)+ Depreciation(Tax rate).
C)(Sales − Costs)(1 − Tax rate).
D)EBIT − Depreciation + Taxes.
E)Net income + Depreciation.

Question

Quizplus · Accepted Answer

Operating cash flow can be calculated as Net Income plus Depreciation. This is because net income does not include cash expenses (such as depreciation), which need to be added back to determine the cash flow from operations.

Assume a Firm Has No Interest Expense or Extraordinary Items