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# OCFCalc - ∆ NWC = 487 65 ∆ NWC NWC changes EXCLUDING...

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HANDOUT: CALCULATING OPERATING CASH FLOW Year we are interested in calculating OCF for: 2002 2002 Timeline 12/31/01=1/1/02 12/31/02 Financial Data for the company: Item Year 2001 Year 2002 Net profit \$282 \$487 Depreciation expense 50 65 \$ 75 \$ 90 Accts. receivable 400 600 Inventory 250 350 Accts. payable 175 250 Calculating OCF: \$ 487 + 65 - 225 \$ 327 OCF 2002 or CFFO 2002 How was that determined? OCF= NI + Depr - Amount that Net Working Capital Changes (latter in symbols:
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Unformatted text preview: ∆ NWC) = 487 + 65 - ∆ NWC NWC changes EXCLUDING Cash = 552 - ∆ NWC Marketable Securities N/P or Current Portion (“Current Maturities”) of LTD Here is a formula you could remember to link the three major working capital accounts to change in net working capital: ∆ NWC = ∆ A/R + ∆ Inv - ∆ A/P = (600-400) + (350-250) - (250-175) = (200) + (100) - (75) = 300 - 75 = \$225...
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