CS Executive · Corporate Accounting and Financial Management · Cash Flows
Kaveri Ltd's debentures at the start were Rs 5,00,000 and at the end Rs 7,00,000. During the year it issued fresh debentures of Rs 4,00,000 for cash and redeemed some at par for cash. No other change occurred. What is the cash outflow on redemption, and the net financing cash flow from debentures?
Redemption is Rs 2,00,000, found from 5,00,000 + 4,00,000 - redemption = 7,00,000. Net financing cash flow is an inflow of Rs 2,00,000 (4,00,000 issued less 2,00,000 redeemed), matching the increase in debentures outstanding.
- ARedemption Rs 2,00,000; net inflow Rs 2,00,000Correct
- BRedemption Rs 2,00,000; net outflow Rs 2,00,000
- CRedemption Rs 4,00,000; net inflow Rs 2,00,000
- DRedemption Rs 6,00,000; net inflow Rs 2,00,000
Explanation
Closing = opening + issue - redemption: 7,00,000 = 5,00,000 + 4,00,000 - R, so R = Rs 2,00,000. Net financing = 4,00,000 - 2,00,000 = inflow of Rs 2,00,000. It equals the rise in the debenture balance.
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