Subjects finance

Operating Cash Flow D8A0C8

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1. **State the problem:** Calculate the Operating Cash Flow (OCF) for Hammett, Inc. given sales, costs, depreciation, interest expense, and tax rate. 2. **Formula for OCF:** $$\text{OCF} = \text{EBIT} \times (1 - \text{Tax Rate}) + \text{Depreciation}$$ where EBIT is Earnings Before Interest and Taxes. 3. **Calculate EBIT:** $$\text{EBIT} = \text{Sales} - \text{Costs} - \text{Depreciation}$$ $$= 34630 - 10340 - 2520 = 21770$$ 4. **Calculate tax on EBIT:** $$\text{Tax} = \text{EBIT} \times \text{Tax Rate} = 21770 \times 0.35 = 7619.5$$ 5. **Calculate Net Operating Profit After Taxes (NOPAT):** $$\text{NOPAT} = \text{EBIT} - \text{Tax} = 21770 - 7619.5 = 14150.5$$ 6. **Calculate OCF:** $$\text{OCF} = \text{NOPAT} + \text{Depreciation} = 14150.5 + 2520 = 16670.5$$ **Final answer:** $$\boxed{16670.5}$$