Hi, had a quick Q on the following.
I’m a bit confused - in the B/S it appears that LT and ST debt both increased, i.e. net borrowing = 40 + 10 = 50.
However, does it make sense that the CFF shows the 50 as negative? Isn’t this an inflow (from a financing perspective)?
Two questions:
What does the last line in the Statement of Cash Flows read?
Did they really receive $90 million in dividends from their shareholders?
Hi @S2000magician, I just edited the OP for #1.
Regarding #2, they don’t clarify. Only the excerpts shared are provided.
You’re missing the point.
If a positive number is a cash inflow, then common stock dividends being +90 makes no sense.
Does the last line read, “Cash generated from financing activities”?
I see what you mean Magician. There’s not enough info given, but I guess leaving the above example beside. The logic would be that if in the B/S there’s an increase in LT and ST debt, then in theory, this’d be an inflow from a financing perspective
Their presentation of CFF is weird. They’re using positive numbers as outflows and negative numbers as inflows.
Tuck that one in the back of your mind: look at an entry that you know must be an outflow (e.g., dividends to shareholders) or that you know must be an inflow (e.g., issuing new stock), and see whether they have it as positive or negative. It seems to me a nasty trick to change the signs and call it “use of cash” instead of the normal “source of cash”, but now that you know, you’ll be alert to it.
