Question

Kleister Company issues bonds for $100 million and repays a long-term notes payable of $10 million. The company also sells its own shares for $12 million and pays cash dividends of $5 million. Cash inflows from financing activities will be:________

Answer 1

Answer:

$97 million cash inflow from financing activities.

Explanation:

Given: Company issue bonds for $100 million

           Repay long term notes payable is $10 million.

           Company sell its own shares= $12 million

           Pay cash dividend= $5 million.

Now, lets calculate the cash inflow from financing activities (CFF)

∴ Formula; Cash inflow from financing activities= $\textrm{cash inflow from issuing equity or debt -(cash paid as dividend +repurchase of debt and equity)}$

Cash inflow are the item through which cash is flowing in the company.

∴ cash inflow= $(\textrm{(cash inflow issuance of bonds and selling own shares)}$

Cash inflow= $(100+12)= \ 112\ million$

Cash inflow from financing activities= $112-(10+5)= 112-15$

Cash inflow from financing activities is $97 million