the 2017 balance sheet of kerber’s tennis shop, inc., showed $2.45 million in long-term debt, $730,000 in the common stock account, and $6.15 million in the additional paid-in surplus account. the 2018 balance sheet showed $3.65 million, $925,000, and $8.25 million in the same three accounts, respectively. the 2018 income statement showed an interest expense of $210,000. the company paid out $570,000 in cash dividends during 2018. if the firm's net capital spending for 2018 was $810,000, and the firm reduced its net working capital investment by $135,000, what was the firm's 2018 operating cash flow, or ocf?

$345,000

Explanation:

Operating cash flow is the amount of money, needed to run the daily affairs or operations of a business entity. It is calculated as;

OCF = Net income + Depreciation + Interest expense + Reduction in working capital.

Given that;

Interest expense = $210,000

Reduction in working capital = $135,000

Operating cash flow = $210,000 + $135,000

Operating cash flow = $345,000

* Note.

The changes in long term debt, common stock and additional paid in capital falls under cash from financing activities, hence are not required.

Also, the net capital spending has to do with investing activities and not cash flow from operating activities, hence not required.

Therefore, the firm's 2018 operating cash flow is $345,000.

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