Question

Which of the following is an indication of cash flow? 1 Buy-back of shares of the...

Which of the following is an indication of cash flow?
1 Buy-back of shares of the firm
2 Dividend declared
3 Purchase of inventory for cash
4 Issue of share of the firm

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Answer #1

Solution -

Cash inflow is the money that are going or that are important part for running the business that is sale of investment, financing. Cash outflow is a money that are leaving the Business. Business is deemed to be healthy when cash inflow is greater than cash Outflow. cash Outflow are Buy back of shares, Payment of Interest etc.

Indication of Cash flow-

1. Buy Back of shares of the firm - This is Cash Outflow as purchase of own shares from the Market.

2. Dividend Declared - No effect on cash as its only Declared not paid.

3. Purchasing of Inventory for Cash - This is cash outflow as inventory is needed for running the business.

4. Issue of shares of the firm - This is Cash Inflow as Cash recieved by issuing the shares.

If you have any query so please feel free to ask me in a comment. Thanks

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