Question

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Based on the following financial statements: 2012 Income Statement Salos Cost of goods sold Depreciation Soling & administrative expenses EBIT Interest Conso Taxable income TO Net income $5,500,000 2,850,000 280,000 1,500,000 870,000 130,000 740,000 330,000 $ 410,000 2012 2011 Balance Sheet, year-end Assets Cash Accounts receivable Inventory Total current assets FBodas Total assets Liabilities and shareholders' equity Accounts payable Short-term debit Total current at Long-tom bonds Totallabates $ 50.000 680,000 490,000 $1,200,000 3,100,000 $4,300,000 $ 40,000 890,000 480.000 $1.210,000 2.800,000 $4.010,000 $ 340,000 480.000 $ 820,000 2.520,000 $3,340,000 $ 450,000 550.000 $1,000,000 2.200.000 $3.200,000 $310.000 500,000 810,000 Common stock Rotained earnings Total shareholders' equity Total Habilities and shareholders' equity $ 310,000 650.000 $ 900.000 $4.300.000 S4.010.000 If the company paid $260,000 in dividends in 2012, how much cash from financing (CFF) did it generate in 2012? 0 - 10,000 -260.000 -510,000

Answer 1

Cash flow from financing is related to the inflow and outflow of cash when new debts or equities are issued or old debts are paid or equities are repurchsed or dividends are paid.

Cash flow from financing

Long term bonds issued(2,520,000-2,200,000)	$320,000
Short term debt paid (550,000-480,000)	($70,000)
Dividends paid	($260,000)
Cash flow from financing	($10,000)

Anawer is -10,000

Note: In above calculation common stock is not included as new stocks are not issued in 2012. It is the same as in 2011.