Question

alculating Total Cash Flows Given the information for Maria's Tennis Shop, Inc., in the previous two problems, suppose you also know that the firm's net capital spending for 2017 was $640,000, and that the firm reduced its net working capital investment by $65,000. What was the firm's 2017 operating cash flow, or OCF?

please show all work

Answer 1

Maria's tennis shop inc

1. Operating cash flow (OCF) / Cash Flow From operating cash flow= Assets + Net capital spending + Changes in net working capital.

Operating cash flow (OCF) / Cash Flow From Assets = 0 + 640000 + 65000 = 705,000 $ (Since no information on assets is given,they are assumed to be zero).

2. cash flow to creditors = Interest paid - ( Ending Long Term Debt - Beginning Long Term Debt)

cash flow to creditors = 187,000 - (2530000 - 2400000) = 57000 $

3. Cash flow to stock holders = Dividends paid - (Ending common stock - beginning common stock) -(ending capital surplus - beginning capital surplus) + Ending treasury stock - beginning treasury stock)

Cash flow to stock holders = 270,000 - (595,000-540,000) - (6180000 - 5600000) + 0 = - 365,000 $

{ If a company raises more money from selling stock than it pays in dividends in a particular period, its cash flow to stockholders will be negative. If a company borrows more than it pays in interest and principal, its cash flow to creditors will be negative,else Positive. }