Depreciation and accounting cash flow A firm in the third year of depreciating its only asset, which originally cost $184000 and has a 5-year MACRS recovery period has gathered the following data relative to the current years operations: Accruals $14,900 Current assets 114,000 Interest expense 14,700 Sales revenue 411,000 Inventory 70,300 Total costs before depreciation, interest and taxes 297,000 Tax rate on ordinary income 40% a. Use the relevant data to determine the operating cash flow for the current year. b. Explain the impact that depreciation, as well as any other noncash charges, has on a firm's cash flows. Operating Cash Flow Sales revenue Less: Total costs before depreciation, interest, and taxes Depreciation expense Earnings before interest and taxes Less: Taxes at 40% Net operating profit after taxes (NOPAT) Plus: Depreciation Operating Cash Flow (OCF) Depreciation and accounting cash flow A firm in the third year of depreciating its only asset, which originally cost $184000 and has a 5-year MACRS recovery period has gathered the following data relative to the current years operations: Accruals $14,900 Current assets 114,000 Interest expense 14,700 Sales revenue 411,000 Inventory 70,300 Total costs before depreciation, interest and taxes 297,000 Tax rate on ordinary income 40% a. Use the relevant data to determine the operating cash flow for the current year. b. Explain the impact that depreciation, as well as any other noncash charges, has on a firm's cash flows. Operating Cash Flow Sales revenue Less: Total costs before depreciation, interest, and taxes Depreciation expense Earnings before interest and taxes Less: Taxes at 40% Net operating profit after taxes (NOPAT) Plus: Depreciation Operating Cash Flow (OCF)