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Herrera corporation has total sales of $3,110,400 and costs of $2,776,000. depreciation is $258,000 and the tax rate is 21 percent. the firm is all-equity financed. what is the operating cash flow?

Sagot :

The operating cash flow for the given information is $318356.

What is operating cash flow?

The amount of cash created by a company's typical business activities is measured as operating cash flow (OCF). Operating cash flow reveals whether a firm can create enough positive cash flow to sustain and increase its operations; otherwise, external finance for capital growth may be required.

The computation of the operating cash flow is done as follows-:

Sales                                                 3110400

(-) COGS                                            (2776000)

EBITDA                                              334400

(-) Depreciation                                  (258000)

=EBIT                                                    76400

(-)Interest                                                  0      

= Earning before tax                              76400

(-)Tax 0.21                                                 (16044)

                                                                318356

= Net Income or Earnings After Tax, 16044 (0.21 *EBIT)

= Operating Income (EBIT)

= 318356 (EBIT + Depreciation - Net Income or earnings after taxes)

Learn more about operating cash flows here:

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