Question

The 2018 balance sheet of Speith’s Golf Shop, Inc., showed long-term debt of $2.5 million, and the 2019 balance sheet showed long-term debt of $2.75 million. The 2019 income statement showed an interest expense of $100,000. The 2018 balance sheet showed $450,000 in the common stock account and $2.1 million in the additional paid-in surplus account. The 2019 balance sheet showed $490,000 and $2.4 million in the same two accounts, respectively. The company paid out $550,000 in cash dividends during 2019. Suppose you also know that the firm’s net capital spending for 2019 was $1,310,000, and that the firm reduced its net working capital investment by $57,000.

What was the firm’s 2019 operating cash flow, or OCF?

Answer 1

C D E HNM + Long term debt Common stock additional paid-in surplus account. 2018 2019 2500000 2750000 450000 490000 2100000 2400000 NOO Cash flow to stock holders Cash flow to stock holders Dividend paid - new equity 210000 11 a) 12 Cash flow to creditors Cash flow to creditors Interest - net new borrowings -150000 13 14 b) 15 16 c) 17 18 d) Cash flow from assets a) + b) 60000 OCF = c) + change in NWC + net capital spending 1313000

Ham to 000 Long term debt Common stock additional paid-in surplus account. 2018 =2.5*10^6 450000 =2.1*10^6 2019 =2.75*10^6 490000 =2.4*10^6 Dividend paid - new equity =550000-(D7+D6-C7-C6) 10 Cash flow to stock holders 11 a) Cash flow to stock holders 12 13 Cash flow to creditors 14 b) Cash flow to creditors Interest - net new borrowings =100000 - (D5-05) 15 16 c) Cash flow from assets a) + b) =C11+C14 17 18 d) OCF = c) + change in NWC + net capital spending =D16-57000+1310000 19 20