Question

DI Question 3 2 pts The 2013 balance sheet of Maria's Tennis Shop, Inc., showed long-term debt of $2.0 million, and the 2014 balance sheet showed long-term debt of $2.8 million. The 2014 income statement showed an interest expense of $568,000. During 2014, Maria's Tennis Shop, Inc., had a cash flow to stockholders for the year of $336,000. Suppose you also know that the firm's net capital spending for 2014 was $828,000, and that the firm reduced its net working capital investment by $75,000 What was the firm's 2014 operating cash flow, or OCF? (Round final answer to the nearest whole dollar. Do not round intermediate calculations). Topic: Cash Flow Identity

Answer 1

OCF + Increase in debt - Interest expense - Capital spending + Decrease in working capital = Cash flow to stock holders

OCF = Cash flow to stock holders - Increase in debt + Interest expense + Capital spending - Decrease in working capital

OCF = 336000 - 800000 + 568000 + 828000-75000

OCF = 857000