I could swear the correct answers were not an available answer on the assignment

Question

I could swear the correct answers were not an available answer on the assignment. Please let me know your answers and work so I can compare. First, what is the operating cash flow for 2005? Second, What is the free cash flow for 2005? Knickerdoodles, Inc. 2004 2005 Sales $ 740 $ 785 COGS 430 460 Interest 33 35 Dividends 16 17 Depreciation 250 210 Cash 70 75 Accounts receivables 563 502 Current liabilities 390 405 Inventory 662 640 Long-term debt 340 410 Net fixed assets 1,680 1,413 Common stock 700 235 Tax rate 35% 35%

Explanation / Answer

for year 2006

Earnings before interest and taxes= 785 -460 -210= 115

Taxable income= 115-35=80

Taxes= .35 x80 = 28

Operating cash flow= 115 +210-28= 297 dollars -------answer

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Cash flow of the firm = 297 –(-93) –(-57)=447 dollars---answer

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