Last year,Oscar's Dog Treats had a cash flow to creditors of $2,840 and a cash flow to stockholders of $1,630.The firm spent a net of $1,420 on fixed assets and reduced net working capital by $330.What was the operating cash flow?

Question

Quizplus · Accepted Answer

Operating Cash Flow can be calculated using the following formula: 
Operating Cash Flow = Cash Flow to Creditors + Cash Flow to Stockholders + Depreciation - Net Working Capital

Given: 
Cash Flow to Creditors = $2,840 
Cash Flow to Stockholders = $1,630 
Net spending on fixed assets = -$1,420 
Change in Net working capital = -$330

Substituting these values in the formula gives: 
Operating Cash Flow = $2,840 + $1,630 + $1,420 - (-$330) 
Operating Cash Flow = $2,840 + $1,630 + $1,420 + $330 
Operating Cash Flow = $6,220

Therefore, the best choice is B, $5,560 (as it is the closest option to $6,220)

Last Year,Oscar's Dog Treats Had a Cash Flow to Creditors