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What is the operating cash flow or OCF? Explain why interest paid is not a component of operating cash flow.

What is the operating cash flow or OCF? Explain why interest paid is not a component of operating cash flow.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Question 5 So Long, Inc, has sales of $334,000, costs of $145,400, depreciation expense of $63,200 and interest expense of $22,300. If the tax rate is 35%, (a) What is the operating cash flow or OCF? (b) Explain why interest paid is not a component of operating cash flow.
Transcribed Image Text:Question 5 So Long, Inc, has sales of $334,000, costs of $145,400, depreciation expense of $63,200 and interest expense of $22,300. If the tax rate is 35%, (a) What is the operating cash flow or OCF? (b) Explain why interest paid is not a component of operating cash flow.
Question 6 During 2019, Bitsincoins Corporation had EBIT of $100,000, a change in net fixed assets of $400,000, an increase in net current assets of $100,000, an increase in spontaneous current liabilities of $400,000, a depreciation expense of $50,000, and a tax rate of 30%. Based on this information, what is Bitsincoin’s free cash flow?
Transcribed Image Text:Question 6 During 2019, Bitsincoins Corporation had EBIT of $100,000, a change in net fixed assets of $400,000, an increase in net current assets of $100,000, an increase in spontaneous current liabilities of $400,000, a depreciation expense of $50,000, and a tax rate of 30%. Based on this information, what is Bitsincoin’s free cash flow?
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