### CFA Practice Question

There are 534 practice questions for this study session.

### CFA Practice Question

Net cash provided by operating activities was \$45,000. Net cash provided by investing activities was \$50,000. The beginning and ending cash and cash equivalent balance was \$12,000 and \$14,000, respectively. What was the cash flow provided (or used) in financing activities?

Change (increase) in cash and cash equivalents = \$2,000. \$45,000 + \$50,000 - X = \$2,000. \$95,000 - X = \$2,000. X = \$93,000, the net cash outflow from financing activities.

User Comment
brimann CFO (45) + CFI (50) + CFF (-93) Cash Flow was Negative = change in cash acct (2) + beg. period cash (12) = end period cash (14)
epizi This is a little hard. Does it mean CFF=CFO+CFI?
bobert well, not to generalize, but it isnt exactly CFF=CFO+CFI

In this case it would be CFO+CFI = CFF + change in cash equivalent balances.
Saxonomy Smart grasshopper, me!
Saxonomy The correct equation would be:

Beginning Bal (positive \$12k here)
+
Change in CFO (positive \$45k here)
+
Change in CFI (positive \$50k here)
+
Change in CFF (negative \$93k here)
=
Ending Balance (positive \$14k here)

In other words, the company lost \$93k cash through it's financing activities, and that sucked up all the money they made from operating and investing activities i.e. \$45k + \$50k.

Ask the CFO to see me in my office immediately!
Saxonomy To be more specific, they didn't "lose" money. They just spent more than they received. I hope those financing efforts have a positive NPV.
ColonelCFA I was TRICKED! I read it that cash = 12k and cash eq = 14k, not that beginning balance = 12k and ending balance = 14k.

fool me once...
safash Begining Bal+CFO+CFI-CFF=ENding Bal

12000+45000+50000-CFI=14000

107000-14000=CFI

CFI = 93000
johntan1979 CFO + CFI + CFF = End balance - Begin balance

If either cash flow component is +ve, it's inflow

-ve, it's outflow
Shaan23 Where I got confused was where it said Net Cash PROVIDED was 45000 and 50000. I assumed cause it was provided it was being used and therefor both were negative(Decrease CFO and CFI).
zhefuli \Sigma_i CF_i = \Delta CashBalance