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CMA Intermediate · Financial Management and Business Data Analytics · Fund Flow Statement - Preparation and Analysis

Meera Engineering Ltd's fund flow statement shows: funds from operations Rs 6,00,000; issue of equity shares Rs 3,00,000; sale of old machinery Rs 1,00,000; purchase of fixed assets Rs 5,50,000; dividend paid Rs 1,20,000; repayment of long-term loan Rs 2,00,000. Working capital at the start was Rs 4,00,000. What is the closing working capital?

Closing working capital is Rs 5,30,000. Total sources are Rs 10,00,000 (operations, shares and machinery sale) and total applications are Rs 8,70,000 (fixed assets, dividend and loan repayment). The surplus of Rs 1,30,000 is an increase in working capital, added to the opening Rs 4,00,000.

  1. ARs 5,30,000Correct
  2. BRs 5,70,000
  3. CRs 3,30,000
  4. DRs 4,30,000

Explanation

Sources = 6,00,000 + 3,00,000 + 1,00,000 = 10,00,000. Applications = 5,50,000 + 1,20,000 + 2,00,000 = 8,70,000. Net increase in working capital = 1,30,000. Closing = 4,00,000 + 1,30,000 = 5,30,000. Rs 5,70,000 would result from omitting the dividend payment... actually Rs 1,20,000 left out gives 1,30,000+1,20,000=2,50,000, so that is not it; Rs 5,70,000 comes from misreading the sale proceeds as an application.

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