Cash Flow Statement: Practical Problems and Solutions

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on April 22, 2023

These problems will help students clarify key concepts about cash flow statements and to ready themselves for their exams and interviews.

Problem 1

From the summarized cash book of Zenith Ltd. shown below, calculate net cash flow from operating activities.

Zenith Ltd. Summarized Cash Book

Solution

Problem 1 Solution


Problem 2

From the following profit and loss account of Samarth Ltd., calculate net cash flows from operating activities.

Problem 2

Solution

Problem 2 Solution


Problem 3

From the following information extracted from the book of Max Ltd. for the year 2019-20, calculate net cash flow from investing activities.

Problem 3

Additional information is given as follows:

  • Depreciation charged on furniture during the year was $10,000
  • Depreciation on machinery charged during the year was $25,000
  • Machinery, the book value of which was $80,000, sold for $75,000
  • Land was sold at a profit of $90,000

Solution

Problem 3 Solution (a)

Note: $190,000 indicates cash outflows are more than inflows.

Working Notes

Problem 3 Solution (b)

Problem 4

You received the following information from Hema Enterprises Pvt. Ltd. Calculate the net cash flow from investing activities.

Problem 4

Information relating to assets sold during the year 2020 is given as follows:

  • Furniture costing $100,000 (accumulated depreciation $20,000) was sold for $70,000
  • Machinery costing $100,000 (accumulated depreciation $30,000) was sold for $80,000

Solution

Problem 4 Solution (a)

Note: Cash outflows are more than cash inflows ($410,000).

Working Notes

Problem 4 Solution (b)


Problem 5

From the following information acquired from Tarapoore Ltd., calculate net cash flows from financing activities for the year 2019-20.

Problem 5

Note: Interest on debentures paid during the year was $30,000 and on bank loan $40,000.

Solution

Problem 5 Solution


Problem 6

Base Ltd. provides the following information to you. Calculate net cash flows from financing activities for the year 2019-20.

Problem 6

Further information is given as follows:

  • Interest on debentures paid, in total, during the year was $60,000
  • Interest on bank loan paid during the year was $25,000
  • Dividends paid during the year amounted to $120,000

Solution

Problem 6 Solution

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About the Author

True Tamplin, BSc, CEPF®

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True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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