CFA Level I · CFA Level I Exam · Analyzing Statements of Cash Flows II
A company reports net revenue of 800 million, cash flow from operating activities (CFO) of 120 million, cash flow from investing activities of -90 million, and cash flow from financing activities of -50 million. In a common-size cash flow statement using net revenue as the base, the net change in cash as a percentage of revenue is closest to:
The net change in cash is -2.5% of revenue. Summing the three activities gives 120 - 90 - 50 = -20 million, and dividing by revenue of 800 million yields -2.5%. Using only operating cash flow would give 15.0%, which ignores investing and financing outflows.
- A-2.5%Correct
- B2.5%
- C15.0%
Explanation
Net change in cash = 120 - 90 - 50 = -20 million. Divided by 800 gives -2.5%. The 15.0% option uses CFO alone (120/800) and ignores investing and financing flows.
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