Answer:
$1,402,000
Explanation:
To find operating cash flow we need to find cashflow from assets first. we need to go through some calculations in order to find cash flow from assets
Cash Flow to Creditors = Interest Expenses Paid – [Long term debt at the end – Long term Debt at the Beginning]
Cash Flow to Creditors = $175,000 – [$5,650,000 - $5,400,000]
Cash Flow to Creditors = $175,000 - $250,000
Cash Flow to Creditors = -$75,000
Cash Flow to Stockholders = Dividend Paid – Net New Equity
Cash Flow to Stockholders= Dividend Paid – [(Common stock at the end + Additional paid-in surplus account at the end) - (Common stock at the beginning + Additional paid-in surplus account at the beginning)
Cash Flow to Stockholders = $400,000 – [($570,000 + $2,500,000) – ($530,000 + $2,300,000)]
Cash Flow to Stockholders = $400,000 – [$3,070,000 - $2,830,000]
Cash Flow to Stockholders = $400,000 - $240,000
Cash Flow to Stockholders = $160,000
Cash Flow from assets
Cash Flow from assets = Cash Flow to Creditors + Cash Flow to Stockholders
Cash Flow from assets = -$75,000 + $160,000
Cash Flow from assets = $85,000
Operating Cash Flow
We know,
Cash flow from assets = Operating Cash flows – Change in Net Working capital – Net Capital Spending
$85,000 = Operating cash flow – (-$73,000) - $1,390,000
Operating cash flow = $85,000 - $73,000 - $1,390,000
Operating cash flow = $1,402,000
