Ask Question
6 October, 06:12

he 2017 balance sheet of Kerber's Tennis Shop, Inc., showed long-term debt of $6 million, and the 2018 balance sheet showed long-term debt of $6.2 million. The 2018 income statement showed an interest expense of $205,000. During 2018, the company had a cash flow to creditors of $5,000 and the cash flow to stockholders for the year was $60,000. Suppose you also know that the firm's net capital spending for 2018 was $1,450,000, and that the firm reduced its net working capital investment by $85,000. What was the firm's 2018 operating cash flow, or OCF

+3
Answers (1)
  1. 6 October, 06:33
    0
    The firm's 2018 operating cash flow, or OCF is $1,470,000

    Explanation:

    For computing the operating cash flow, we have to use the formula of cash flow from assets which is shown below

    = Operating cash flow - net capital spending - changes in working capital

    where,

    cash flow from assets = cash flow to creditors + cash flow to shareholders

    = $5,000 + $60,000

    = $65,000

    And, the other item would remain same

    Now put these values to the above formula

    So, the value would equal to

    $65,000 = Operating cash flow - $1,450,000 - (-$85,000)

    $65,000 = Operating cash flow - $1,450,000 + $85,000

    So, the operating cash flow = $1,470,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “he 2017 balance sheet of Kerber's Tennis Shop, Inc., showed long-term debt of $6 million, and the 2018 balance sheet showed long-term debt ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers