7. Net cash flow

You are the CFO of ABC Corp. You are looking to hire a financial analyst, and youve given an assignment to two short-listed candidates. Youve given the following information to both job applicants:

	The company just reported net sales of $5,937,500. Assume that there are no noncash sales.
	Its operating costs (excluding depreciation and amortization) are 65% of the companys total revenues.
	The depreciation and amortization expenses are 5% of total sales.
	Its interest charges are 15% of earnings before interest and taxes (EBIT), and it pays a tax rate of 40%.

Youve asked the candidates to give you a number that best represents the cash flow situation of the company.

Net cash flow or Net Income is the money that the business is left with after paying its operating expenses, interest expense, and taxes. However, because some revenues and expense do not involve the making of cash payments, the firms net income may differ from the companys true net cash flow situation.

Kurt submits a report stating that the firm has $1,205,312 in available net cash flow, while Jake's report states that the firm has $908,437 in net cash flow.

Based on the information given to them, which applicant has provided a better estimate of the companys current cash flows?

Kurt or Jake??