Hot and Cold has annual sales of $847,000, annual depreciation of $47,000, and net working capital of $43,000. The tax rate is 21 percent and the profit margin is 7.3 percent. The firm has no interest expense. What is the amount of the operating cash flow

The amount of the operating cash flow is $108,831

Explanation:

In this question, we are tasked with calculating the amount of the operating cash flow.

Firstly, we calculate the net income.

Mathematically, net income = Sales × %  profit margin

From the question, sales = $847,000

% profit margin = 7.3% = 7.3/100 = 0.073

Net income = $847,000 × 0.073 = $61,831

Finally, Operating cash flow = Net income + Depreciation

From the question, depreciation = $47,000

Plugging this alongside the net income,

Operating cash flow = $61,831 + $47,000 = $108,831

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