The 2023 balance sheet of Swiatek's Tennis Shop, Incorporated, showed long-term debt of $5.6 million, and the 2024 balance sheet showed long-term debt of $5.8 million. The 2024 income statement showed an interest expense of $185,000. During 2024, the company had a cash flow to creditors of −$15,000 and the cash flow to stockholders for the year was $65,000. Suppose you also know that the firm’s net capital spending for 2024 was $1.41 million and that the firm reduced its net working capital investment by $77,000. What was the firm’s 2024 operating cash flow, or OCF?

**Note: Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.**

To calculate the firm's **Operating Cash Flow (OCF)**, we can use the **Cash Flow Identity** for the firm:

\[
OCF = \text{Cash Flow to Creditors} + \text{Cash Flow to Stockholders} + \text{Net Capital Spending} + \text{Change in Net Working Capital}
\]

Here are the details provided:

- **Cash Flow to Creditors** = -\$15,000
- **Cash Flow to Stockholders** = \$65,000
- **Net Capital Spending** = \$1.41 million = \$1,410,000
- **Change in Net Working Capital** = -\$77,000 (a reduction)

Now, we can plug these values into the formula:

\[
OCF = (-15,000) + 65,000 + 1,410,000 + (-77,000)
\]

Simplifying:

\[
OCF = 65,000 - 15,000 + 1,410,000 - 77,000
\]
\[
OCF = 50,000 + 1,410,000 - 77,000
\]
\[
OCF = 1,460,000 - 77,000
\]
\[
OCF = 1,383,000
\]

Thus, the **Operating Cash Flow (OCF)** for 2024 is **\$1,383,000**.

Would you like more details on how I calculated this or have any further questions? 

Here are five related questions you might find useful:
1. How do you calculate cash flow to creditors and stockholders?
2. What are some key differences between operating cash flow and free cash flow?
3. What is the importance of net capital spending in the cash flow analysis?
4. How does a change in net working capital impact cash flow?
5. Why is the operating cash flow important for a company's financial health?

**Tip**: When analyzing a company's cash flow, remember that changes in working capital and capital expenditures can significantly affect the operating cash flow, so it's essential to account for them correctly.

The 2023 balance sheet of Swiatek's Tennis Shop, Incorporated, showed long-term debt of $5.6 million, and the 2024 balance sheet showed long-term debt of $5.8 million. The 2024 income statement showed an interest expense of $185,000. During 2024, the company had a cash flow to creditors of −$15,000 and the cash flow to stockholders for the year was $65,000. Suppose you also know that the firm’s net capital spending for 2024 was $1.41 million and that the firm reduced its net working capital investment by $77,000. What was the firm’s 2024 operating cash flow, or OCF?

Learn how to calculate operating cash flow (OCF) using financial data from a company's balance sheet and income statement. In this example, we calculate OCF for Swiatek's Tennis Shop based on cash flows to creditors, stockholders, capital spending, and net working capital changes. The 2024 OCF is $1,383,000.

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