- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 4. Analyzing Statements of Cash Flows I
- Subject 4. The Indirect Method
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?
Correct Answer: $93,000
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 Contributed Comments 11
| 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 |