The 2014 balance sheet of Sugarpova\'s Tennis Shop, Inc., showed long-term debt
ID: 2612959 • Letter: T
Question
The 2014 balance sheet of Sugarpova's Tennis Shop, Inc., showed long-term debt of $5.2 million, and the 2015 balance sheet showed long-term debt of $5.3 million. The 2015 income statement showed an interest expense of $170,000. During 2015, the company had a cash flow to creditors of $70,000 and the cash flow to stockholders for the year was $75,000. Suppose you also know that the firm’s net capital spending for 2015 was $1,380,000, and that the firm reduced its net working capital investment by $71,000.
What was the firm’s 2015 operating cash flow, or OCF
The 2014 balance sheet of Sugarpova's Tennis Shop, Inc., showed long-term debt of $5.2 million, and the 2015 balance sheet showed long-term debt of $5.3 million. The 2015 income statement showed an interest expense of $170,000. During 2015, the company had a cash flow to creditors of $70,000 and the cash flow to stockholders for the year was $75,000. Suppose you also know that the firm’s net capital spending for 2015 was $1,380,000, and that the firm reduced its net working capital investment by $71,000.
Explanation / Answer
OCF = cash flow to stockholders + cash flow to creditors + net capital spending - reduced its net working capital
OCF = 75000+70000+ 1380000 - 71000
OCF = $ 1454000
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