The 2014 balance sheet of Maria\'s Tennis Shop, Inc., showed long-term debt of $
ID: 2813573 • Letter: T
Question
The 2014 balance sheet of Maria's Tennis Shop, Inc., showed long-term debt of $4.5 million, and the 2015 balance sheet showed long-term debt of $5.9 million. The 2015 income statement showed an interest expense of $67044. During 2015, Maria’s Tennis Shop, Inc. realized the following: Cash flow to creditors $ 16565 Cash flow to stockholders $ 77992 Suppose you also know that the firm’s net capital spending for 2015 was $2.6 million, and that the firm reduced its net working capital investment by $98423. What was the firm’s 2015 operating cash flow, or OCF?
Explanation / Answer
Cash flow from assets = Cash flow to creditors+ Cash flow to stockholders
= $16,565+$77,992
= $94,557
Operating cash flow = Cash flow from assets+Change in NWC+Net capital spending
= $94,557-$98,423+$2,600,000
= $2,596,134
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