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Hi dear Tutor, when we deduct both variable costs and fixed costs from sales revenue will it be operating cash flow before depreciation or after depreciation?There is a question in Bpp (investment decision section question first multiple choice question) saying forecasted operating cash flows in ROCE calculation which asset’s depreciation has not been deducted from those cash flows.Accumulated profits divided 4 four years to derive average accounting profit.
I confused here sales revenue minus variable cost minus fixed cost equal to before tax cash flow which is also called opersting cash flow before tax and depreciation?
if operating cash flow is not after depreciation why in that example depreciation has not been deducted from operating cash flow?Operating profit is after depreciation – depreciation is a fixed cost.
Depreciation is not a cash flow and therefore operating cash flow is before depreciation.
Yes Now I watched the example it says operating profit which is after depreciation.Sometimes I solve too many questions and I pass over.Now it is clear.
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