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

$OCF = EBIT + Depreciation - Taxes$

Where:

• EBIT is Earnings Before Interest and Taxes.
• Depreciation is a non-cash charge that reduces taxable income but does not affect cash flow.
• Taxes are calculated based on the taxable income.

Let's go step by step.

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

$EBIT = Sales - Costs - Depreciation$

Given:

• Sales = $53,000
• Costs = $24,200
• Depreciation = $2,550

$EBIT = 53,000 - 24,200 - 2,550 = 26,250$

2. Calculate Taxes:

First, calculate the taxable income (which is EBIT - Interest Expense):

$Taxable\ Income = EBIT - Interest\ Expense$

Given:

• Interest Expense = $2,300

$Taxable\ Income = 26,250 - 2,300 = 23,950$

Now calculate the taxes using the tax rate of 24%:

$Taxes = Taxable\ Income \times Tax\ Rate$

$Taxes = 23,950 \times 0.24 = 5,748$

3. Calculate the OCF:

Now that we have the necessary components, we can calculate OCF:

$OCF = EBIT + Depreciation - Taxes$

$OCF = 26,250 + 2,550 - 5,748 = 23,052$

So, the Operating Cash Flow (OCF) is $23,052.

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Would you like a more detailed breakdown of any part of the calculation? Or do you have any other questions?

Here are some related questions you might find useful:

1. How does depreciation affect the calculation of operating cash flow?
2. What is the difference between operating cash flow (OCF) and net income?
3. How do you calculate free cash flow from operating cash flow?
4. Why do we subtract taxes in the OCF calculation, even though taxes are an expense?
5. How does interest expense affect OCF, and why is it excluded from the calculation?

Tip: Operating cash flow is often used to determine the financial health of a company, as it reflects cash generated by the company's core business operations.