Calculate the operating cash flow for the repair shop

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Reference no: EM133102568

Question - The owner of a bicycle repair shop forecasts revenues of $168,000 a year. Variable costs will be $52,000, and rental costs for the shop are $32,000 a year. Depreciation on the repair tools will be $12,000.

Required -

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: EM133102568

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