Question

Calculate ‘Cash Flows from Financing Activities’ from the following information: \[ \begin{array}{|l|c|c|} \hline \textbf{Particulars} & \textbf{31st March, 2023 (₹)} & \textbf{31st March, 2022 (₹)} \\ \hline \text{Equity Share Capital} & 15,00,000 & 10,00,000 \\ \text{Bank Overdraft} & 90,000 & 1,20,000 \\ \text{Loan from bank} & 7,00,000 & 6,00,000 \\ \hline \end{array} \] 

Additional Information: 
(i) Interest paid on bank loan amounted to ₹ 60,000.
(ii) Dividend paid ₹ 1,10,000.
 

Hint:

Cash Flows from Financing Activities include the cash raised from issuing shares or loans and the cash outflows for repaying loans, paying interest, and dividends.

Answer 1

To calculate the Cash Flows from Financing Activities, we need to consider the following: Equity Share Capital: The increase in equity share capital is: \[ \text{Increase in Equity Share Capital} = ₹ 15,00,000 - ₹ 10,00,000 = ₹ 5,00,000 \] This is a cash inflow. Bank Overdraft: The decrease in bank overdraft is: \[ \text{Decrease in Bank Overdraft} = ₹ 90,000 - ₹ 1,20,000 = - ₹ 30,000 \] This is a cash outflow. Loan from Bank: The increase in loan from the bank is: \[ \text{Increase in Loan from Bank} = ₹ 7,00,000 - ₹ 6,00,000 = ₹ 1,00,000 \] This is a cash inflow. Interest Paid on Bank Loan: Interest paid on bank loan is a financing activity outflow of ₹ 60,000. Dividend Paid: Dividend paid is a cash outflow of ₹ 1,10,000. Cash Flows from Financing Activities: \[ \text{Cash Flows from Financing Activities} = \text{Increase in Equity Share Capital} + \text{Increase in Loan from Bank} - \text{Decrease in Bank Overdraft} - \text{Interest Paid on Loan} - \text{Dividend Paid} \] \[ = ₹ 5,00,000 + ₹ 1,00,000 - (- ₹ 30,000) - ₹ 60,000 - ₹ 1,10,000 = ₹ 4,60,000 \]