The ABC Corporation has the following information. How much is the Operating Cash Flow?

Question

ABC Corporation
Earnings before interest & taxes $ 1,588
Depreciation 130
Beginning net fixed assets 1,650
Net new equity raised 450
Taxes 424

Answer 1

To compute the Operating Cash Flow (OCF) for ABC Corporation, we can use the following formula:

\[ OCF = Earnings , before , interest , and , taxes (EBIT) + Depreciation - Taxes \]

Using the information you provided:

• Earnings before interest & taxes (EBIT): $1,588
• Depreciation: $130
• Taxes: $424

Now we can plug these values into the formula:

\[ OCF = 1,588 + 130 - 424 \]

Calculating this step-by-step:

1. Add EBIT and Depreciation: \[ 1,588 + 130 = 1,718 \]

2. Subtract Taxes: \[ 1,718 - 424 = 1,294 \]

Therefore, the Operating Cash Flow for ABC Corporation is:

\[ \text{Operating Cash Flow} = $1,294 \]