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
Only items that move cash in or out are shown under financing activities. A dividend is paid in the year after it is proposed, once the shareholders approve it.
Buy back of own shares = (₹1,00,000) outflow
Dividend paid (previous year’s proposed dividend) = (₹10,000) outflow
Issue of bonus shares = no cash flow
Current year proposed dividend = no cash flow this year
Net cash used in financing activities = ₹1,10,000
Bonus shares are issued out of reserves, so no cash comes in; the current year’s proposed dividend will be paid only next year.
NCERT (2026-27 edition):
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