after tax cash flow

Jamms · May 30, 2008, 2:48pm

How do you solve for after tax cash flow given the following info: Revenue: 5000 COGS: 2000 Depreciation: 400 Tax Rate: 30% Is it simply: 5000 - 2000 = 3000 - 400 = 2600 2600 x (1-.3) = 1820 1820+400 = 2220 Is this correct? After tax cash flow is $2220?

amberpower · May 30, 2008, 2:49pm

I thought depreciation is added back in after taxes.

strangedays · May 30, 2008, 2:50pm

I think so

wood1000 · May 30, 2008, 2:53pm

Yep that looks right to me

tony2 · May 30, 2008, 2:53pm

you don’t really know the cash flow as you’d have to take into account non-cash working capital changes as well (accts payable, receivable, inventory) but yes you add back depreciation if you work your way from net income and back up (indirect)