Last year, Gibson Corporation reported after-tax Operating Cash Flow (OCF) of $4
ID: 2772426 • Letter: L
Question
Last year, Gibson Corporation reported after-tax Operating Cash Flow (OCF) of $45,500. The following information was also reported for the same period:
Beginning
Ending
Accounts receivable
$35,230
$38,550
Inventory
58,440
52,390
Accounts payable
68,150
60,420
Based on this information, what was Gibson’s cash flow? (Assuming zero depreciation expenses and zero capital spending)
$50,500
$43,240
$40,500
$47,120
$45,330
Beginning
Ending
Accounts receivable
$35,230
$38,550
Inventory
58,440
52,390
Accounts payable
68,150
60,420
Explanation / Answer
Beginning Ending Changes in Net working capital Accounts receivable $35,230 $38,550 -3320 Inventory 58,440 52,390 6050 Accounts payable 68,150 60,420 -7730 Changes in Net working capital ($5,000) Operating cash flow 45,500.00 Cash flow = 45500+ 5000 (changes in net working capital) = 50500
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