Interactive thread on investment-related questions

[Ali_2]

Re: Interactive thread on investment-related questions

@Southie

Annual depreciation = 10000
Annual amortization= 5000
Receivables = 20000
Payables = 10000

Operating cash flow = net income + interest + taxes + depreciation + amortization + payables - receivables

= 125,000+2000+8000+10000+5000+10000-20000= 125,015,000

@Southie

I am confused. So if I understand you,

OCF = net income + interest paid + Amort+ depr + payables - receivables?

That is we don’t add taxes paid to net income?

@Ali

just a small correction

even if we consider interest related to Financing activities, one has to deduct taxes paid to arrive at OCF.

if you are adding tax expense to NI you have to deduct Taxes paid to calculate OCF