Question

Use the information below to answer question Balance Sheet 2014 2015 2014 2015 Current assets 200 250 Current liabilities 300 250 Net fixed assets 2,775 3,535 Long-term debt 1,250 2,135 2015 Income Statement Sales 5,436 Costs 2,245 Depreciation 448 Interest expense 123 1. What is the operating cash flow (OCF) for 2015? Assume the tax rate is 35 percent. A. 5,436 B. 2,274 C. 3,191 D. 2,743 E. 6,007

Answer 1

the correct answer is "b"

Step-by-step explanation:

Answer 2

B. 2,274

Step-by-step explanation:

The operating cash flow is shown below:

= EBIT + Depreciation - Income tax expense

where,

EBIT = Sales - cost of good sold - depreciation expense

= $5,436 - $2,245 - $448

= $2,743

Income tax expense would be

= (Sales - cost of good sold - depreciation expense - interest expense) × tax rate

= ($5,436 - $2,245 - $448 - $123) × 35%

= $917

And all other items would remain same

Now put these values to the above formula

So, the value would equal to

= $2,743 + $448 - $917

= $2,274