The december 31, 2015, balance sheet of schism, inc., showed long-term debt of $

Question

The december 31, 2015, balance sheet of schism, inc., showed long-term debt of $1,440,000, $148,000 in the common stock account, and $2,730,000 in the additional paid-in surplus account. The December 31, 2016, balance sheet showed long-term debt of $1,660,000, $158,000 in the common stock account, and $3,030,000 in the additional paid-in surplus account. The 2016 income statement showed an interest expense of $98,000 and the company paid out $153,000 in cash dividends during 2016. The firms net capital spending for 2016 was $1,040,000, and the firm reduced its net working capital by $133,000.
What was the firm’s 2016 operating cash flow? The december 31, 2015, balance sheet of schism, inc., showed long-term debt of $1,440,000, $148,000 in the common stock account, and $2,730,000 in the additional paid-in surplus account. The December 31, 2016, balance sheet showed long-term debt of $1,660,000, $158,000 in the common stock account, and $3,030,000 in the additional paid-in surplus account. The 2016 income statement showed an interest expense of $98,000 and the company paid out $153,000 in cash dividends during 2016. The firms net capital spending for 2016 was $1,040,000, and the firm reduced its net working capital by $133,000.
What was the firm’s 2016 operating cash flow?
What was the firm’s 2016 operating cash flow?

Explanation / Answer

Operating cash flow=net income from operations+decrease in working capital
Net income from operations=
Capital Expenditure ( increase in fixed assets) =1040000
Capital expenditure is funded by:
minus decrease in working capital -133,000
minus increase in long term debt =166000-1440000= -220,000
minus increase in common stock 148000-158000=10000
minus increase in paid in surplus =2730000-3030000= -300,000
= net income after dividend and interest expense =1040000-663000=377000
add: dividend $ 153,000
add: interest expense $ 98,000
= net income before dividend and interest expense = $ 628000
Operating cash flow=628000+133000
=761000

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