The 2014 balance sheet of Sugarpova\'s Tennis Shop, Inc., showed long-term debt
ID: 2797232 • Letter: T
Question
The 2014 balance sheet of Sugarpova's Tennis Shop, Inc., showed long-term debt of $6.4 million, and the 2015 balance sheet showed long-term debt of $6.6 million. The 2015 income statement showed an interest expense of $225,000. During 2015, the company had a cash flow to creditors of $25,000 and the cash flow to stockholders for the year was $80,000. Suppose you also know that the firm’s net capital spending for 2015 was $1,490,000, and that the firm reduced its net working capital investment by $93,000. What was the firm’s 2015 operating cash flow, or OCF? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
The 2014 balance sheet of Sugarpova's Tennis Shop, Inc., showed long-term debt of $6.4 million, and the 2015 balance sheet showed long-term debt of $6.6 million. The 2015 income statement showed an interest expense of $225,000. During 2015, the company had a cash fiow to creditors of $25,000 and the cash flow to stockholders for the year was S80,000. Suppose you also know that the firm's net capital spending for 2015 was $1,490,000, and that the firm reduced its net working capital investment by $93,000. What was the firm's 2015 operating cash flow, or OCF? (Enter your answer in dollars, not millions of dollars, e.g, 1,234,567.) Operating cash flow $ 132000Explanation / Answer
Answer:
Cash flow from assets= Cash flow to creditors + Cash flow to stockholders=
Cash flow from assets= $25,000 + $80,000
Cash flow from assets= $105,000
Cash flow from assets = OCF – Change in NWC – Net capital spending
Cash flow from assets= $105,000
$105,000 = OCF – (–$93,000) – 1,490,000
Operating cash flow= $105,000 – 93,000 + 1,490,000
Operating cash flow= $1,502,000
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