CFA Practice Question

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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



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
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