Question

"The 2017 balance sheet of Kerber's Tennis Shop, Inc., showed long-term debt of $3.1 million, and the 2018 balance sheet showed long-term debt of $3.2 million. The 2018 income statement showed an interest expense of $150,000. During 2018, the company had a cash flow to creditors of $50,000 and the cash flow to stockholders for the year was $90,000. Suppose you also know that the firm’s net capital spending for 2018 was $1,340,000, and that the firm reduced its net working capital investment by $63,000. What was the firm’s 2018 operating cash flow, or OCF? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)"

Answer 1

$1,417,000

Step-by-step explanation:

Cash flow from asset = Cash flow to creditors + Cash flow from shareholders = $50000 + $90000 = $140000

Cash flow from asset = Operating cash flow - Net capital spending - Net change in net working capital

$140,000 = Operating cash flow - $1340000 - (-$63000)

$140,000 = Operating cash flow - $1,340,000 + $63,000

Operating cash flow = $140000 + $1,340,000 - $63,000

Operating cash flow = $1,417,000