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If Earnings Before Interest and Taxes (EBIT) is $93,000, calculate Operating Cash Flow if Sales is $350,000 Cost of Goods Sold (COGS) is $140,000 Fixed
If Earnings Before Interest and Taxes (EBIT) is $93,000, calculate Operating Cash Flow if
- Sales is $350,000
- Cost of Goods Sold (COGS) is $140,000
- Fixed costs is $43,000
- Selling, General, Administrative Expenses (SGA) are $28,000
- Depreciation is $46,000
- Interest Expense is $18,000
- Taxrateis40%
Here is where I am getting confused. The formula for Operating Cash Flow is:
EBIT+Depreciation - Taxes = Operating Cash Flow
(93,000+46,000) - .4(x)
This is how I see the formula in my eyes but I'm not sure what is being taxed. The sales? The EBIT? COGS?
Please tell me the answer and how you solved the problem, thank you
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