Samoa's Tools has annual sales of $760,000 and a profit margin of 8 percent.The annual depreciation expense is $50,000.What is the amount of the annual operating cash flow if the company has no long-term debt?

Question

Quizplus · Accepted Answer

The operating cash flow can be calculated using the formula: Operating Cash Flow = Net Income + Depreciation. First, calculate the net income: Net Income = Sales * Profit Margin = $760,000 * 0.08 = $60,800. Then, add the depreciation expense: Operating Cash Flow = $60,800 + $50,000 = $110,800.

Samoa's Tools Has Annual Sales of $760,000 and a Profit