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Westkost [7]
3 years ago
7

The 2017 balance sheet of Kerber’s Tennis Shop, Inc., showed long-term debt of $1.87 million, and the 2018 balance sheet showed

long-term debt of $2.21 million. The 2018 income statement showed an interest expense of $255,000. During 2018, Kerber's Tennis Shop, Inc., realized the following: Cash flow to creditors –$85,000 Cash flow to stockholders $170,000 Suppose you also know that the firm’s net capital spending for 2018 was $1,250,000, and that the firm reduced its net working capital investment by $45,000. What was the firm’s 2018 operating cash flow, or OCF? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
Business
1 answer:
jeka57 [31]3 years ago
3 0

Answer:

$1,290,000

Explanation:

Given that,

Cash flow to creditors = -$85,000

Cash flow to stockholders = $170,000

Firm’s net capital spending for 2018 = $1,250,000

Firm reduced its net working capital investment by $45,000

Cash Flow from Assets:

= Cash Flow to Creditor + Cash Flow to Stockholders

= -$85,000 + $170,000

= $85,000

Cash Flow from Assets = OCF - Net Capital Spending - Change in Net Working Capital

$85,000 = OCF -  $1,250,000 - (-$45,000)

OCF = $85,000 + $1,250,000 - $45,000

        = $1,290,000

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