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 determine the Cash Flows from Financing Activities, the following elements are considered: Equity Share Capital: An increase of ₹ 5,00,000 (₹ 15,00,000 - ₹ 10,00,000) in equity share capital represents a cash inflow. Bank Overdraft: A decrease of ₹ 30,000 (₹ 90,000 - ₹ 1,20,000) in bank overdraft represents a cash outflow. Loan from Bank: An increase of ₹ 1,00,000 (₹ 7,00,000 - ₹ 6,00,000) in the loan from the bank represents a cash inflow. Interest Paid on Bank Loan: Interest paid on the bank loan is a financing activity outflow amounting to ₹ 60,000. Dividend Paid: Dividends paid constitute a cash outflow of ₹ 1,10,000. Cash Flows from Financing Activities:\[\text{Cash Flows from Financing Activities} = \text{Increase in Equity Share Capital} + \text{Increase in Loan from Bank} - \text{Decrease in Bank Overdraft} - \text{Interest Paid on Loan} - \text{Dividend Paid}\]\[= ₹ 5,00,000 + ₹ 1,00,000 - (- ₹ 30,000) - ₹ 60,000 - ₹ 1,10,000 = ₹ 4,60,000\]