Question

Calculate ‘Cash Flows from Financing Activities’ from the following information: \[ \begin{array}{|l|c|c|} \hline \text{Particulars} & \text{31.3.2023 (₹)} & \text{31.3.2022 (₹)} \\ \hline \text{Equity Share Capital} & 15,00,000 & 10,00,000 \\ \text{Bank Overdraft} & 90,000 & 1,20,000 \\ \text{Loan from Bank} & 7,00,000 & 6,00,000 \\ \hline \end{array} \] Additional Information:
- Interest paid on bank loan amounted to ₹ 60,000.
- Dividend paid ₹ 1,10,000.

Hint:

Cash flows from financing activities include proceeds from or repayments of equity and borrowings, adjusted for dividend and interest payments.

Answer 1

1. Proceeds from Issue of Equity Share Capital: \[ \text{Increase in Equity Share Capital} = ₹ 15,00,000 - ₹ 10,00,000 = ₹ 5,00,000 \] 2. Proceeds from Additional Loan: \[ \text{Increase in Loan from Bank} = ₹ 7,00,000 - ₹ 6,00,000 = ₹ 1,00,000 \] 3. Repayment of Bank Overdraft: \[ \text{Decrease in Bank Overdraft} = ₹ 1,20,000 - ₹ 90,000 = ₹ 30,000 \] 4. Payment of Dividend: \[ \text{Dividend Paid} = -₹ 1,10,000 \] 5. Payment of Interest: \[ \text{Interest Paid on Loan} = -₹ 60,000 \] 6. Net Cash Flows from Financing Activities: \[ \text{Net Cash Flows from Financing Activities} = \text{Proceeds from Equity Shares} + \text{Proceeds from Loan} - \text{Repayment of Overdraft} - \text{Dividend Paid} - \text{Interest Paid} \] \[ = ₹ 5,00,000 + ₹ 1,00,000 - ₹ 30,000 - ₹ 1,10,000 - ₹ 60,000 = ₹ 4,00,000 \] Final Answer: Net Cash Flows from Financing Activities = \(\mathbf{₹ 4,00,000}\).