During the year, Dole Cola Ltd. had sales and costs of $600 and $ 300 respectively. Depreciation was $150 and interest

paid was $30. Taxes were calculated at a straight 40 percent. Dividends were $30. All figures are in millions of dollars. What

was the operating cash flow for Dole? Why is this different from net income?

The easiest thing to do here is to create a statement of comprehensive income. We can then fill in the numbers we need.

Dole Cola's statement of comprehensive income follows:

DOLE COLA 2015 Statement of Comprehensive Income ($ millions)

Net sales $600

Cost of goods sold 300

Depreciation 150

EBIT $150

Interest paid 30

Taxable income $120

Taxes 48

Net income $ 72

Retained earnings $42

Dividends 30

Net income for Dole is thus $72. We now have all the numbers we need; so referring back to the Canadian Enterprises

examplewe have:

DOLE COLA 2015 Operating Cash Flow ($ millions)

EBIT $150

+ Depreciation 150

- Taxes _ 4 8

Operating cash flow $252

As this example illustrates, operating cash flow is not the sam e as net income, because depreciation and interest are sub

tracted out when net income is calculated. If you recall our earlier discussion, we do not subtract these out in computing

operating cash flow because depreciation is not a cash expense and interest paid is a financing expense