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Calculate the operating cash flow for the repair shop

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Reference no: EM133188300

Question - The owner of a bicycle repair shop forecasts revenues of $180,000 a year. Variable costs will be $55,000, and rental costs for the shop are $35,000 a year. Depreciation on the repair tools will be $15,000.

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: EM133188300

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