Peter's Boats Has Sales of $680,000 and a Profit Margin

question 34

Multiple Choice

Peter's Boats has sales of $680,000 and a profit margin of 5.2 percent.The annual depreciation expense is $74,000.The tax rate is 34 percent.What is the amount of the operating cash flow if the company has no long-term debt?

• A)$48,498
• B)$86,502
• C)$109,360
• D)$473,960
• E)$399,960

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's net income or loss.

Investee Earnings

The portion of income attributable to an investor from its investment in an associated company.

Cash Dividends

Payments made by a corporation to its shareholders from the company's profits.