Disturbed, Inc

Accounting Sep 05, 2020

Disturbed, Inc., had the following operating results for the past year: sales = $22,619; depreciation = $1,400; interest expense = $1,128; costs = $16,535. The tax rate for the year was 38 percent. What was the company's operating cash flow?

Expert Solution

Sales= $22,619

Costs=$16,535

Depreciation =$1,400

Interest expense =$1,128

Tax rate=38%

Earnings before interest and tax (EBIT) = Sales -Costs - Depreciation

= 22619- 16535- 1400

= 4684

Taxes= (EBIT - Interest expenses)* tax rate

= (4684- 1128)* 38%

= 1351.28

Operating cash flow = EBIT - Taxes + Depreciation

= 4684- 1351.28+ 1400

= 4732.72

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