Deborah Michelle Messenger
Week 1 Homework
5/8/2016
1. Calculating OCF. Hammett, Inc., has sales of $34,630, costs of $10,340, depreciation expense of $2,520, and interest expense of $1,750. If the tax rate is 35 percent, what is the operating cash flow, or OCF?
a. Operating cash flow $ 17283
Sales - Cost - Dep = EBIT
34630 - 10340 - 2520 = 21770
EBIT - Interest = Taxable Income
21770 - 1750 = 20020
Taxes (35%) = 20020 x .35 = 7007
Net income: 20020 - 7007 = 13013
EBIT