The 2017 balance sheet of Kerber's Tennis Shop, Inc. showed long term debt of $5.8 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 $0 and the cash flow to stockholders for the year was $85,000. Suppose you also know that the firms net capital spending for 2018 was $1,445,000, ad that the firm reduced its net working capital investment by $85,000What was the firms 2018 operating cash flow, or OCF?

Question

Keaton Peck

Business

11 June, 20:57

The 2017 balance sheet of Kerber's Tennis Shop, Inc. showed long term debt of $5.8 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 $0 and the cash flow to stockholders for the year was $85,000. Suppose you also know that the firms net capital spending for 2018 was $1,445,000, ad that the firm reduced its net working capital investment by $85,000What was the firms 2018 operating cash flow, or OCF?

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Answers (1)

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Maximilian Archer · Answer 1

It is $1,300,000

Explanation:

Income from resources = Cash stream to lenders + Cash stream to investors

$-60,000 + 1,300,000 = $1,240,000

Working income = Cash stream from resources - Change in Net working capital + Net capital spending

Working income = $1,240,000 - $55,000 + $1,300,000 = $2,485,000

Income to investors $ 1,300,000

it is $1,300,000.