Question

Last year, Webster Farms had annual revenue of $87,200, depreciation of $11,600, cost of goods sold of $54,700, and administrative expenses of $8,300. The firm paid $3,200 in dividends and paid taxes of $2,646. What was the operating cash flow component of the firm’s free cash flow?

Answer 1

Answer:

Operating cash flow = $21,554

Explanation:

Operating cash flow, will include all operating expenses and revenues which have a cash effect.

Annual revenue = $87,200

Less: Cost of goods sold = $54,700

Gross Profit = $32,500

Less: Administrative Expense = $8,300

Less: Income Tax = $2,646

Operating cash flow = $21,554

Note: Since depreciation is a non cash expense it will not b considered.