Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › operating cash flow and net operating cash flow
- This topic has 3 replies, 2 voices, and was last updated 4 years ago by John Moffat.
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- September 17, 2019 at 11:46 pm #546512
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?September 18, 2019 at 7:32 am #546531Operating profit is after depreciation – depreciation is a fixed cost.
Depreciation is not a cash flow and therefore operating cash flow is before depreciation.
September 18, 2019 at 10:28 am #546574Yes 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.
September 18, 2019 at 1:36 pm #546607You are welcome 🙂
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