- CFA Exams
- CFA Level I Exam
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 23. Understanding Cash Flow Statements
- Subject 2. Preparing the Cash Flow Statement
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?
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
|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|