Houston Chambers
How much net cash flow did Company A generate over the past year?
Company A had net sales of $90,000 over the past year. It's operating costs (excluding depreciation) were $65,000, and its depreciation expense was $7,000. The company has no amortization charges, but it does have $30,000 worth of debt at a 10% annual interest rate. If the firm's rate is 40%, how much net cash flow did Company A generate over the past year?
Public Comments
- Let's see Sales of 90,000 Operating Costs of 65,000 Interest 3,000 (30,000 debt x 10%) Net Cash of 22,000 Assuming that the rate refers to the tax rate of 40% then tax expense is 8800 (22,000 x 40%) so net cash flow is 13,200 Depreciation is ignored since it is a non cash expense
