The 2017 balance sheet of Kerber's Tennis Shop, Inc., showed long-term debt of $6.4 million, and the 2018 balance sheet showed long-term debt of $6.6 million. The 2018 income statement showed an interest expense of $225,000. During 2018, 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 2018 was $1,490,000, and that the firm reduced its net working capital investment by $93,000. What was the firm’s 2018 operating cash flow, or OCF? (Enter your answer in dollars, not millions of dollars, e. g., 1,234,567.)

$1,452,000

Explanation:

Calculation for the firm’s 2018 operating cash flow

First step is to calculate the Cash flow from assets using this formula

Cash flow from assets= Cash flow to creditors + Cash flow to stockholders

Let plug in the morning

Cash flow from assets=-$25,000 + $80,000= $55,000

Now let calculate Cash flow from assets using this formula

Cash flow from assets = OCF capital - Net capital spending-Change in Net Capital spending

Let plug in the formula

$55,000=OCF-$1,490,000-($93,000)

OCF=$1,490,000+$55,000-$93,000

OCF=$1,452,000

Therefore the firm’s 2018 operating cash flow is $1,452,000

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: