Question

From the following information, calculate cash flow from investing and financing activities:

• Purchase of Machinery ₹1,60,000
• Sale of Machinery ₹40,000
• Interest Paid ₹10,000
• Dividend Paid ₹15,000
• Proceeds from Issue of Shares ₹2,00,000
• Proceeds from Long-Term Borrowings ₹50,000

Hint:

Classify each transaction correctly — investing = assets, financing = capital structure. Ignore operating cash items like depreciation here.

Answer 1

Cash Flow from Investing Activities \[ = \text{Sale of Machinery} - \text{Purchase of Machinery} = ₹40,000 - ₹1,60,000 = ₹(1,20,000) \] Cash Flow from Financing Activities \[ = \text{Proceeds from Shares + Borrowings} - \text{Interest Paid} - \text{Dividend Paid} = ₹2,00,000 + ₹50,000 - ₹10,000 - ₹15,000 = ₹2,25,000 \] Cash Flow from investing involves inflow from sale and outflow from purchase of assets. Financing involves raising capital and repayment outflows like dividends and interest.