To calculate the Operating Cash Flow (OCF), we use the following formula:

$OCF = (Sales - Costs - Taxes) + Depreciation$

We break it down step by step.

Step 1: Calculate Earnings Before Interest and Taxes (EBIT)

EBIT is the company's earnings from operations before subtracting interest and taxes.

$EBIT = \text{Sales} - \text{Costs} - \text{Depreciation}$

$EBIT = 39,230 - 12,930 - 2,630 = 23,670$

Step 2: Calculate Taxable Income

Taxable Income is EBIT minus Interest Expense.

$\text{Taxable Income} = EBIT - \text{Interest Expense}$

$\text{Taxable Income} = 23,670 - 1,910 = 21,760$

Step 3: Calculate Taxes

We now calculate the taxes owed using the tax rate of 22%.

$\text{Taxes} = \text{Taxable Income} \times \text{Tax Rate}$

$\text{Taxes} = 21,760 \times 0.22 = 4,787.20$

Step 4: Calculate Net Income

Net Income is Taxable Income minus Taxes.

$\text{Net Income} = \text{Taxable Income} - \text{Taxes}$

$\text{Net Income} = 21,760 - 4,787.20 = 16,972.80$

Step 5: Calculate Operating Cash Flow (OCF)

Finally, OCF is Net Income plus Depreciation (since depreciation is a non-cash expense).

$OCF = \text{Net Income} + \text{Depreciation}$

$OCF = 16,972.80 + 2,630 = 19,602.80$

Final Answer:

The Operating Cash Flow (OCF) is $19,602.80.

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Would you like more details on any part of this? Here are some related questions to consider:

1. How does depreciation affect cash flow in financial statements?
2. What are the differences between OCF and net income?
3. Can OCF be negative, and what does that indicate about a company?
4. How does interest expense impact taxable income?
5. Why is EBIT used to calculate taxable income?

Tip: Understanding how non-cash expenses (like depreciation) are added back in OCF helps in analyzing cash flow beyond just profits.