a. Operating cash flow for 2019-
Operating cash flow= Sales – (Costs + Other expenses) – Tax
Operating cash flow= $178,000 – ($103,600 + $5,100) – $12,705
Operating cash flow=$56,595
b. Cash flow to creditors for 2019-
Cash flow to creditors= Interest Paid + redemption of long term loans
Cash flow to creditors= $8,900+$4,000
Cash flow to creditors= $12,900
c. Cash flow to stockholders for 2019-
Cash flow to stockholders= dividend payments – new stock issues + redemption of shares.
Cash flow to stockholders= $10,143 – $2,900+0
Cash flow to stockholders= $7,243
d. If net fixed assets increased by $23,140 during the year, what was the addition to NWC-
Cash flow to creditors plus cash flow to stockholders equals cash flow from assets which means cash flow from assets is:
Cash flow from assets = Cash flow to creditors + Cash flow to stockholders
Cash flow from assets = $12,900 + $7,243
Cash flow from assets = $20,143
Net capital spending = Depreciation + Increase in fixed assets
Net capital spending = $12,100 + $23,140
Net capital spending = $35,240
Cash flow from assets = OCF – Change in NWC – Net capital spending
$20,143 = $56,595 – Change in NWC – $35,240
Change in NWC = $1,212
Please mention your doubts in the comment box, if any.
Calculating Cash Flows Given the information for Whelan, Inc., in Problems 10 and 11, suppose you also know that the firm’s net capital spending for 2019 was $745,000 and that the firm reduced its net working capital investment by $94,300. What was the firm’s 2019 operating cash flow, or OCF?
