Answer:
The firm’s 2019 operating cash flow is $610,500
Explanation:
Cash Flow to Creditors
Cash Flow to Creditors = Interest Expenses Paid - Net Increase in Long term debt
= Interest Expenses Paid - [Long term debt at the end - Long term Debt at the Beginning]
= $95,500 - [$1,610,000 - $1,415,000]
= $95,500 - $195,000
= -$99,500
Cash Flow to Stockholders
Cash Flow to Stockholders = Dividend Paid – Net New Equity
= 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)
= $148,000 - [($143,000 + $2,980,000) - ($143,000 + $2,680,000)]
= $148,000 - [$3,123,000- $2,823,000]
= $148,000 - $300,000
= -$152,000
Cash Flow from assets
Cash Flow from assets = Cash Flow to Creditors + Cash Flow to Stockholders
= -$99,500 - $152,000
= -$251,500
Operating Cash Flow
Cash flow from assets = Operating Cash flows - Change in Net Working capital - Net Capital Spending
-$251,500 = Operating cash flow - (-$128,000) - $990,000
-$251,500 = Operating cash flow + $128,000 - $990,000
Operating cash flow = $990,000 - $128,000 - $251,500
Operating cash flow = $610,500
Therefore, the firm’s 2019 operating cash flow is $610,500
