CS Executive · Corporate Accounting and Financial Management · Cash Flows
Sunrise Textiles Ltd (AS 3) issued 50,000 equity shares of Rs 10 each at a premium of Rs 5 per share, fully received in cash. It also repaid a term loan of Rs 2,00,000 and paid Rs 1,00,000 as dividend. What is the net cash flow from financing activities (ignoring interest)?
Financing inflow from shares is Rs 7,50,000 (50,000 x Rs 15). Outflows are Rs 3,00,000 (loan repayment plus dividend). The net result is an inflow of Rs 4,50,000, because issuing capital increases cash more than repayments reduce it.
- ANet outflow of Rs 2,50,000Correct
- BNet outflow of Rs 3,00,000
- CNet inflow of Rs 4,50,000
- DNet outflow of Rs 5,000
Explanation
Share issue inflow = 50,000 x 15 = Rs 7,50,000. Outflows = 2,00,000 + 1,00,000 = Rs 3,00,000. Net = 7,50,000 - 3,00,000 = inflow of Rs 4,50,000. So the correct option is the net inflow; the option listing an outflow is wrong.
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