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Answer to Question #49636 in Finance for scott

Question #49636
2. Knickerdoodles, Inc.
Sales COGS Interest Dividends Depreciation Cash Accounts receivables Current
liabilities
2004 $ 740 430 33 16 250 70 563 390
2005 $ 785 460 35 17 210 75 502 405
Inventory Long-term debt Net fixed assets Common stock Tax rate
2004 662 340 1,680 700 35%
2005 640 410 1,413 235 35%
What is the operating cash flow (NOPAT + depreciation) for 2005?

a) $143 b)$285 c)$325 d) $353 e)$365
Expert's answer
Sales COGS Interest Dividends Depreciation Cash Accounts receivables Current liabilities
2004 $ 740 430 33 16 250 70 563 390
2005 $ 785 460 35 17 210 75 502 405
Inventory Long-term debt Net fixed assets Common stock Tax rate 
2004 662 340 1,680 700 35% 
2005 640 410 1,413 235 35%
NOPAT = Net Profit After Tax + after tax Interest Expense – after tax Interest Income
Operating cash flow = (NOPAT + depreciation) =  Net Profit After Tax + after tax Interest Expense – after tax Interest Income + depreciation = (785 - 460)*(1 - 0.35) - 35 + 210 - 17 = 365
So, the right answer is e) $365

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