Question

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



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:

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