Question

During 2020, LAL Corp. had the following cash flows: (1) received cash of $5,000 billed to a customer in 2020; (2) earned $20,000 of net income; (3) paid interest of $6,000 on a corporate bond issue; (4) paid dividends of $8,000 to its stockholders; (5) borrowed $50,000 from a local bank; and (6) purchased its own shares of common stock for $15,000. What is LAL's net cash flows from financing activities for 2020

Answer 1

Answer: $21,000

Explanation:

Financing activities refer to those that a company engages in, in relation to capital needed to run the affairs of the business which means it included Equity and Debt.

Financing Activities: Interest paid, dividends paid, money borrowed from bank, stock repurchase

Net cash flows from financing = Money borrowed from bank - Interest paid - dividends paid - Stock repurchase

= 50,000 - 6,000 - 8,000 - 15,000

= $21,000