Ben's Border Café is considering a project which will produce sales of $16,000 and increase cash expenses by $10,000. If the project is implemented, taxes will increase from $23,000 to $24,500 and depreciation will increase from $4,000 to $5,500. What is the amount of the operating cash flow using the top-down approach?

Question

Business

Mckenna Oliver

21 November, 13:54

Ben's Border Café is considering a project which will produce sales of $16,000 and increase cash expenses by $10,000. If the project is implemented, taxes will increase from $23,000 to $24,500 and depreciation will increase from $4,000 to $5,500. What is the amount of the operating cash flow using the top-down approach?

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Answers (1)

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Kimberly Henderson · Answer 1

the amount of the operating cash flow using the top-down approach is $4.500

Explanation:

operating cash flow using the top-down approach

operating cash flow = Sales - increase cash expenses - increase in tax

=16000-10000 - (24500-23000)

=$ 4500

Note:increase cash expenses and increase in tax are cash outflow. Depreciation has not been considered as it is a non cash expenditure.