FINANCIAL MANAGEMENT: Working Capital Management
FIN3702
ASSIGNMENT 02 SEMESTER 01 2022
UNIQUE NUMBER: 734015
, Question 1
A firm’s operating cash flow is defined as …
1. gross profit minus operating expenses.
2. gross profit minus depreciation.
3. earnings before interest and tax (EBIT) – taxes + depreciation.
4. EBIT + depreciation.
Operating cash flow – (OCF) the cash flow a firm generates from its normal operations;
calculated as Net operating profits after taxes plus depreciation NOPAT + Depreciation
NOPAT represents the firms’ earnings before interest and after taxes, so it is calculated as
follows NOPAT = EBIT x (1-T)
By substitution OCF = (EBIT x (1-T)) + Depreciation
Question 2
All of the following are inflows of cash EXCEPT …
1. a decrease in accounts receivable.
2. net profits after taxes.
3. dividends.
4. an increase in accruals.
FIN3702
ASSIGNMENT 02 SEMESTER 01 2022
UNIQUE NUMBER: 734015
, Question 1
A firm’s operating cash flow is defined as …
1. gross profit minus operating expenses.
2. gross profit minus depreciation.
3. earnings before interest and tax (EBIT) – taxes + depreciation.
4. EBIT + depreciation.
Operating cash flow – (OCF) the cash flow a firm generates from its normal operations;
calculated as Net operating profits after taxes plus depreciation NOPAT + Depreciation
NOPAT represents the firms’ earnings before interest and after taxes, so it is calculated as
follows NOPAT = EBIT x (1-T)
By substitution OCF = (EBIT x (1-T)) + Depreciation
Question 2
All of the following are inflows of cash EXCEPT …
1. a decrease in accounts receivable.
2. net profits after taxes.
3. dividends.
4. an increase in accruals.
