Burns Industries has total sales of 270000 and costs of 1050

Burns Industries has total sales of $270,000 and costs of $105,000 (Note:costs do not include depreciation expense). Depreciation expense is $45,000 and the tax rate is 35 percent. The firm does not have any interest expense. What is the operating cash flow (OCF)? DO NOT USE DOLLAR SIGNS OR COMMAS IN YOUR ANSWER. ROUND ANSWER TO THE NEAREST DOLLAR. Your Answer:

Solution

OCF=Earnings before interest and taxes-Taxes+Depreciation

= $ 120,000 - $ 42,000 + $ 45,000

= $ 123,000

Hence the correct answer is 123000

Note :

Particulars	Amount($)
Sales	270,000
Less: Operating Cost	105,000
Less:depreciation	45,000
EBIT	120,000
Less:interest expense	-
EBT	120,000
Less:taxes @ 35%	42,000
Net income	78,000
OCF	123,000