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Nathalia James
on Dec 09, 2024

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Ronnie's Coffee House is considering a project which will produce sales of $6,000 and increase cash expenses by $2,501. If the project is implemented, taxes will increase by $1,301. The additional depreciation expense will be $1,001. An initial cash outlay of $2,000 is required for net working capital. What is the amount of the operating cash flow using the top-down approach?

A) $200
B) $1,500
C) $2,200
D) $3,500
E) $4,200

Operating Cash Flow

Cash generated from a company's normal business operations, indicating its ability to generate sufficient positive cash flow to maintain and grow operations.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating its short-term financial health and efficiency.

Cash Expenses

Payments that a business makes in cash, including operating expenses, purchasing of goods, and other transactions.

  • Master the techniques for determining operating cash flows employing various models including the top-down, bottom-up, and tax shield route.
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ANISHA BEHERADec 10, 2024
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