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Given the following statement of comprehensive income data, calculate operating cash flow: net...

Question:

Given the following statement of comprehensive income data, calculate operating cash flow:

net sales=$16,500

cost of goods sold=$10,350

operating expenses=$3,118

depreciation=$800

interest expense=$900

tax rate=34%.

Operating Cash Flow:

The term operating cash flow refers to the net cash flow or net cash used in the business under the operating activities. Now it is important to understand what are operating activities, the term operating activities is used for those activities which are related to the operations of the business like sales, purchases, daily repairs, etc. Generally to understand the flow of cash within the business the cash flows are divided into different categories namely operating activities, investing activities and the financing activities. And the cash flow from the operating activities is called the operating cash flow.

Answer and Explanation:


The operating cash flow is $2,579.12

Explanation

Step 1

Computation of Net Income

Amount
Net sales $16,500
Less: Cost of goods sold $10,350
Less: Operating expenses $3,118
Operating Cash Flow Before Tax $3,032
Less: Depreciation $800
Less: Interest expense $900
Income before tax $1,332
Tax ($1,332 * 34%) $452.88
Net Income $879.12

Step 2

Computation of operating cash flow

Amount
Operating cash flow before tax $3,032
Less: Tax $452.88
Operating cash flow $2,579.12

Learn more about this topic:

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Operating Cash Flow: Definition & Examples

from Finance 101: Principles of Finance

Chapter 10 / Lesson 4
10K

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