Question

A firm paid dividends of 100,000 SAR, paid interest of 200,000 SAR, reduced debt principal outstanding (paid off debt) in the amount of 1,000,000 SAR, and sold new stock for 1,500,000. What was the firm's cash flow from financing activities?

		200,000 SAR flowed into the firm
		200,000 flowed out of the firm
		2,800,000 SAR flowed into the firm
		2,800,000 SAR flowed out of the firm

Answer 1

Cash flows from Financing Activities = Cash Inflows from Financing activities - Cash Outflows from financing activities

Div Paid = Outflow

Int Paid = Outflow

Repayment of Debt = Outflow

Sold New stock = Inflow

Cash flows from Financing Activities = Cash Inflows from Financing activities - Cash Outflows from financing activities

= SAR 1500000 - [ SAR 100000 + SAR 200000 + SAR 1000000 ]

= SAR 1500000 - SAR 1300000

= SAR 200000

Cash Inflow from financing Activities i SAR 200000

Option A is correct