Calculate Cash Flow from Financing Activities from the following information:
Buy back of own shares ₹1,00,000
Issue of bonus shares ₹50,000
Current Year Proposed Dividend ₹40,000
Previous Year Proposed Dividend ₹10,000
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Outflow of ₹1,10,000.
Current year proposed dividend is not included in cash flow statement as it will be approved in the next meeting and become due. It is shown as footnotes.
Buy back of own shares ₹1,00,000- Outflow of cash
Issue of bonus shares ₹50,000- no inflow of cash as bonus shares are issued from reserves.
Previous Year Proposed Dividend ₹10,000- Outflow of cash.
Total outflow = 1,00,000 + 10,000
= 1,10,000