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14 November, 02:21

Hailey, Inc., has sales of $19,730, costs of $9,300, depreciation expense of $1,970, and interest expense of $1,460. Assume the tax rate is 35 percent. What is the operating cash flow, or OCF? (Do not round intermediate calculations and round your answer to the nearest whole number, e. g., 32.) Operating cash flow

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  1. 14 November, 04:47
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    Operating cash flow is $7,980

    Explanation:

    EBIT = sales of $19,730 - costs of $9,300 - depreciation expense of $1,970 = $8,460

    Tax = (EBIT of $8,460 - interest expense of $1,460) * Tax rate 35%

    = $2,450

    The operating cash flow (OCF) = EBIT + Depreciation - Tax = $8,460 + $1,970 - $2,450 = $7,980
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