he 2017 balance sheet of Kerber's Tennis Shop, Inc., showed $2.35 million in long-term debt, $700,000 in the common stock account, and $6.35 million in the additional paid-in surplus account. The 2018 balance sheet showed $3.5 million, $975,000, and $8.2 million in the same three accounts, respectively. The 2018 income statement showed an interest expense of $370,000. The company paid out $570,000 in cash dividends during 2018. If the firm's net capital spending for 2018 was $730,000, and the firm reduced its net working capital investment by $165,000, what was the firm's 2018 operating cash flow, or OCF?

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18 November, 22:57

he 2017 balance sheet of Kerber's Tennis Shop, Inc., showed $2.35 million in long-term debt, $700,000 in the common stock account, and $6.35 million in the additional paid-in surplus account. The 2018 balance sheet showed $3.5 million, $975,000, and $8.2 million in the same three accounts, respectively. The 2018 income statement showed an interest expense of $370,000. The company paid out $570,000 in cash dividends during 2018. If the firm's net capital spending for 2018 was $730,000, and the firm reduced its net working capital investment by $165,000, what was the firm's 2018 operating cash flow, or OCF?

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Barbara Holden · Answer 1

Operating cash flow for 2018 is $535,000

Explanation:

Operating cash flow is the cash flow derived from daily operations of the firm.

In calculating it, the below proforma is used:

Net income 0

add:

depreciation 0

Interest expense 370000

reduction in working capital 165000

Cash flow from operations 535000

The changes in long-term debt, common stock and additional paid in capital fall under cash from financing activities.

The net capital spending has to do investing activities and not cash flow from operating activities