Alternative OCF Example

Alternative OCF Example - -Net Capital Spending-Change in...

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Alternative OCF Example Operating Cash Flow = Net Income + Depreciation + Interest Expense 1
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Tax Shield Approach 2 A third alternative method in calculating OCF is the Tax Shield Approach. OCF = (Sales – Costs)(1-T) + (Depreciation x T) Sales $200,000 Sales $200,000 Costs $137,000 Costs $137,000 Depreciation $30,000 EBT $63,000 EBT $33,000 Taxes (34%) $21,420 Taxes (34%) $11,220 Net Profit $41,580 Net Profit $21,780 Deprec Tx Shield $10,200 Cash Flow $51,780 Cash Flow $51,780 Project’s cash flows without Depreciation After-tax impact from Depreciation Pro-Forma Income Statement
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Net Capital Spending Operating Cash Flow
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Unformatted text preview: -Net Capital Spending-Change in Net Working Capital = Cash Flow From Assets Ending Net Fixed Assets-Beginning Net Fixed Assets + Depreciation s = Net Capital Spending 3 Net Capital Spending Example Net Capital Spending = Ending Net FA Beginning Net FA + Depreciation = ($11,961 - $10,788) + $1,406 = $2,579 4 Change In Net Working Capital Operating Cash Flow-Net Capital Spending-Change in Net Working Capital = Cash Flow From Assets Ending Net Working Capital-Beginning Net Working Capital = Change in Net Working Capital 5...
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Alternative OCF Example - -Net Capital Spending-Change in...

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