Fill in the missing numbers for the following income statement.
Calculate the OCF.
What is the depreciation tax shield?
Operating Cash flow and Depreciation tax shield:
Operating cash flow refers to the cash flow generated from the business operations of the company. Depreciation tax shield refers to the tax benefits arising due to charging depreciation as an expense.
Answer and Explanation:
The completed table is as follows:
|Less: Tax @ 34%||42,738.00|
|Operating Cash Flow||202,362.00|
Depreciation tax shield = Depreciation amount x Tax Rate = 119,400 x 34% = $40,596.00
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Learn more about this topic:
from Finance 101: Principles of FinanceChapter 10 / Lesson 4