1.sales = 18,700
cogs = 10,300
depreciation = 1,900
interest = 1,250
tax = 40%

what is operating cash flow?

2. EPS = 2.35
benchmark PE = 21
earnings expected to grow @ 7%/year
a. what is estimate of current stock?
b. if the company pays no dividents, what is implied return on company's stock over the next year? what does this tell about imlicit stock return using PE valuation?

e/
1. what i've gotten so far is

sales 18,700
cogs (10,300)
interest (1,250)
dep (1,900)
---------------------
net income before taxes 5,250
tax (40%) (2,100)
-----------------------------
net income 3,150
add dep 1,900
add interest 1,250
--------------------------
OCF 6,300

am i missing something here?

This post was edited by andysundala on Oct 22 2014 04:50am

1)
OCF = EBIT+ Depreciation - Taxes, so you have to find the taxes paid (2100 as you did)

OCF = (18,700 - 10,300) - 2100 =


2a)
2.35 * 21 =


2b )

i.
2.35 * 21 * 1.07 =

ii.
= ((2bi./2a)-1)*100%

This post was edited by Simens on Oct 22 2014 05:07am