Freedom Inc anticipates an increase of $1 000,000 in Net Operating Income from first year sales of a new product.Taxes will be $350,000 and the company took $150,000 in depreciation expense.Operating cash flow equals [blank].
A)$1,000,000
B)$500,000
C)$800,000
D)$650,000

Question

Quizplus · Accepted Answer

Operating cash flow can be calculated as:
Operating cash flow = Net Operating Income + Non-cash expenses (e.g. depreciation) - Taxes
Therefore, Operating cash flow = $1,000,000 + $150,000 - $350,000 = $800,000. Thus, the correct answer is C.

Freedom Inc Anticipates an Increase of $1 000,000 in Net