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15 November, 10:59

Last year, Webster Farms had annual revenue of $87,200, depreciation of $11,600, cost of goods sold of $54,700, and administrative expenses of $8,300. The firm paid $3,200 in dividends and paid taxes of $2,646. What was the operating cash flow component of the firm's free cash flow?

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  1. 15 November, 12:22
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    Operating cash flow = $21,554

    Explanation:

    Operating cash flow, will include all operating expenses and revenues which have a cash effect.

    Annual revenue = $87,200

    Less: Cost of goods sold = $54,700

    Gross Profit = $32,500

    Less: Administrative Expense = $8,300

    Less: Income Tax = $2,646

    Operating cash flow = $21,554

    Note: Since depreciation is a non cash expense it will not b considered.
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