Calculate the operating cash flow for the repair shop

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Question - The owner of a bicycle repair shop forecasts revenues of $196,000 a year. Variable costs will be $59,000, and rental costs for the shop are $39,000 a year. Depreciation on the repair tools will be $19,000.

a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%.

b. Calculate the operating cash flow for the repair shop using the three methods given below: Now calculate the operating cash flow.

i. Dollars in minus dollars out.

ii. Adjusted accounting profits.

iii. Add back depreciation tax shield.

Reference no: EM133048808

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