Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Which financial metric is measured by net operating profit after taxes (NOPAT) plus depreciation?

Operating cash flow

Net sales

Earnings before interest and taxes (EBIT)

Gross profit

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Verified step by step guidance

Understand the concept of Net Operating Profit After Taxes (NOPAT): NOPAT represents the profit a company generates from its operations after deducting taxes but before financing costs like interest expenses.

Learn about depreciation: Depreciation is a non-cash expense that represents the reduction in value of tangible assets over time. It is added back to net income when calculating cash flow because it does not involve actual cash outflow.

Define Operating Cash Flow: Operating cash flow is a financial metric that measures the cash generated by a company’s core business operations. It is calculated by adding non-cash expenses (like depreciation) to NOPAT.

Analyze the formula: Operating cash flow = NOPAT + Depreciation. This formula highlights that operating cash flow is derived by combining NOPAT and depreciation to reflect the cash generated from operations.

Compare the options: Evaluate each option provided (Operating cash flow, Net sales, EBIT, Gross profit) and identify which one aligns with the formula and definition of operating cash flow.