Cash flow from financing activities
Cash flow from financing activities will include cash generated or utilized in the following activities:
- Increase/decrease in long term debt.
- Increase in share capital.
- Payment of interest on long-term debt. Again, to include this here, it must be excluded from the computation of profit for the year.
An illustration of cash flow from financing activities can be seen in Figure 8.5:
Figure 8.5 – Cash flow from financing activities
You will then aggregate the cash flows from the different sources to arrive at net cash inflow/outflow:
Figure 8.6 – Net cash flow and closing balance of cash
Prepare the cash flow statement, as usual, ending with a figure for the closing cash balance. Then, post this figure to the balance sheet as cash and cash equivalents for the projected years.
If the balance sheet now balances, this indicates that our model up to this stage is...
