For next year,By-Way has projected sales of $435,000,costs of $254,000,depreciation of $35,000,interest expense of $22,000,and taxes of $28,500.What is the amount of the projected operating cash flow?
A)$130,500
B)$157,900
C)$152,500
D)$161,500
E)$181,000

Question

Quizplus · Accepted Answer

Operating cash flow (OCF) can be calculated using the following formula:
OCF = EBIT + Depreciation - Taxes

EBIT (Earnings Before Interest and Taxes) = Sales - Costs - Depreciation
EBIT = $435,000 - $254,000 - $35,000 = $146,000

Taxes = $28,500

OCF = $146,000 + $35,000 - $28,500 = $152,500

Therefore, the option C ($152,500) is the correct answer.

For Next Year,By-Way Has Projected Sales of $435,000,costs of $254,000,depreciation