Question

The 2010 balance sheet of Maria's Tennis Shop, Inc., showed long-term debt of $5.7 million, and the 2011 balance sheet showed long-term debt of $5.90 million. The 2011 income statement showed an interest expense of $190,000. During 2011, Maria�s Tennis Shop, Inc. realized the following:

Cash flow to creditors $ -10,000
Cash flow to stockholders $ 70,000
Suppose you also know that the firm�s net capital spending for 2011 was $1,420,000, and that the firm reduced its net working capital investment by $79,000.
What was the firm�s 2011 operating cash flow, or OCF? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)
Operating cash flow $

Answer 1

The operating cash flow is $259000

Step-by-step explanation:

Operating cash flows is net income adjusted for changes in working capital,depreciation and cash flow to creditors.

Strictly in this sense,operating cash flow=interest expense+cash flow to creditors+net working capital investment

The adapted formula is this case as net income is not given.

Operating cash flow=$190000-$10000+$79000

=$259000

Above all, I extracted all the applicable variables to operating cash flow from the question.

The increase in debt relates to financing activity

Cash flow to stockholders also is a financing activity.

Net capital spending is related to investing activity.