Chevelle, Inc., has sales of $40,000, costs of $20,000, depreciation expense of $1,500, and interest expense of $800.
| If the tax rate is 35 percent, what is the operating cash flow, or OCF? |
| Operating cash flow | $ |
Explanation:
| To calculate OCF, we first need the income statement: |
| Income Statement | ||||||
| Sales | $ | 40,000 | ||||
| Costs | 20,000 | |||||
| Depreciation | 1,500 | |||||
| | | |||||
| EBIT | $ | 18,500 | ||||
| Interest | 800 | |||||
| | | |||||
| Taxable income | $ | 17,700 | ||||
| Taxes (35%) | 6,195 | |||||
| | | |||||
| Net income | $ | 11,505 | ||||
| | | |||||
| | ||||||
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