He 2017 balance sheet of Kerber’s Tennis Shop, Inc., showed $2.35 million in long-term debt, $700,000 in the common stock account, and $6.35 million in the additional paid-in surplus account. The 2018 balance sheet showed $3.5 million, $975,000, and $8.2 million in the same three accounts, respectively. The 2018 income statement showed an interest expense of $370,000. The company paid out $570,000 in cash dividends during 2018. If the firm's net capital spending for 2018 was $730,000, and the firm reduced its net working capital investment by $165,000, what was the firm's 2018 operating cash flow, or OCF?

Operating cash flow for 2018 is $535,000

Explanation:

Operating cash flow is the cash flow derived from daily operations of the firm.

In calculating it, the below proforma is used:

Net income                                     0

add :

depreciation                                    0

Interest expense                        370000

reduction in working capital      165000

Cash flow from operations         535000

The changes in long-term debt,common stock and additional paid in capital fall under cash from financing activities.

The net capital spending has to do investing activities and not cash flow from operating activities

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