Respuesta :
Based on the information given, the company's operating cash flow for 2018 is closest to $6 million.
Operating cash flow = Cash received from customers − (Cash paid to suppliers + Cash paid to employees + Cash paid for other operating expenses + Cash paid for interest + Cash paid for income taxes)
Cash received from customers = revenue + decrease in accounts receivable = $37 + $3 = $40 million
Cash paid to suppliers = Cost of goods sold + increase in inventory + decrease in accounts payable
= $16 + $4 + $2 = $22 million.
Therefore, the company's operating cash flow = $40 − $22 − Cash paid for salaries − Cash paid for interest − Cash paid for taxes = $40 − $22 − $6 − $2 − $4 = $6 million.
Operating cash flow, which measures the amount of cash generated by a company's normal business operations, is an important measure for determining the financial progress of its core business activities. It signifies whether a company can generate enough positive cash flow to sustain and grow its operations, or else external financing for capital expansion may be required.
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