Question: How does depreciation enter into the calculation of operating cash inflows? How does the income statement format in Table 11.6 relate to Equation 4.3 for

How does depreciation enter into the calculation of operating cash inflows? How does the income statement format in Table 11.6 relate to Equation 4.3 for finding operating cash flow(OCF)?

Calculation of Operating Cash Inflows Using the Income Statement Format TABLE 11.6 Revenue Expenses (excluding depreciation and interest) Earnings before depreciation, interest, and taxes (EBDIT) Deprcciation Earnings before interest and taxes (EBIT) Taxes (rate = T) Net operating profit after taxes [NOPAT = EBIT x (1-T)] + Depreciation Opcrating cash inflows (same as OCF in Equation 4.3) OCF = [EBIT (1-T)] + Depreciation 4.3

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