Question

Suppose you are given the following financial statement information for 2015 and 2016. Calculate the operating cash flows (OCF) for 2016.  (Enter a whole number).

Income Statement (2016)			Balance Sheet
Sales	$9,352			2015	2016
Cost of goods sold	$3,612		Cash	$2,450	$2,856
Other Expenses	$95		Accounts Receivable	$1,690	$1,780
Depreciation	$1,250		Inventory	$3,570	$3,460
EBIT	$4,395		Current Assets	$7,710	$8,096
Interest	$45		Net Fixed Assets	$4,289	$4,319
EBT	$4,350		Total Assets	$11,999	$12,415
Taxes (30%)	$1,305.00
Net income	$3,045.00		Accounts Payable	$1,278	$1,478
Dividends	$2,436.00		Notes Payable	$2,568	$2,658
Addition to Retained Earnings	$609.00		Current Liabilities	$3,846	$4,136
			Long-term Debt	$2,985	$2,929
			Total Equity	$5,168	$5,350
OCF	=???		Total L + E	$11,999	$12,415

Answer 1

The question is not clear as to whether the requirement is Statement of cash flows [Operating activities] or

the accounting measure OCF. Hence, both answers are given.

STATEMENT OF CASH FLOWS (INDIRECT METHOD)
Cash flows from operating activities:
Net income		$              3,045
Adjustments to reconcile net income to net cash flows from operating activitiess:
Depreciation expense	$               1,250
Increase in accounts receivable	$                   -90
Increase in inventory	$                 -110
Increase in accounts payable	$                  200	$              1,250
Net cash provided by operating activities		$              4,295
Operating cash flow = EBIT+Depreciation-Taxes = 4395+1250-1305 =	$               4,340