Question

Calculating total cash flows

Given the information for Kerber's tennis shop inc., in problems 8 and 9, suppose you also know that the firms net capital spending for 2018 was $1,250,000 and that the firm reduced its net working capital investment by $45000. What was the firms 2018 operating cash flow or OCF? Given cash flow to creditors -$85000 and cash flow go stockholders $170000

please show step by step

Answer 1

Ans:

The firms 2018 operating cash flow or OCF = $1,290,000

Working:

Given

The Capital Spending for 2018 Was $1,250,000

The reduction in net Working capital (NWC) investment for 2018 Was $45,000

The cash flow to Creditors during 2018 was -$85,000

The cash flow to stockholders during 2018 was $170,000

cash flow from asset = cash flow to creditors + cash flow to stockholders

               = -85,000 +170,000

               = $85,000

cash flow from asset = Operating Cash Flow - net capital spending - change in working capital

$85,000 = OCF – 1,250,000- (-45,000)

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

$85,000= OCF – 1,205,000

$85,000+$1,205,000= OCF

OCF =$1,290,000