Q3

Question 3: Following is the Cash Conservation Equation, which always holds as an accounting equality. C-Ird + F Where C = Net cash flow from operation (inflow), I = Net cash flow for investment (outflow), C-I = Free Cash Flow, d = Net payout to equity holders (cash dividends to common shareholders + acquisition of treasury stock - new share issues), F = Net cash flow to financial asset issuers and investors in debt securities. Requirement 1: Confirm if the Cash Conservation Equation holds for financial data below for the fiscal year of 2x10. (12 points) Cash inflow from sales $850 cash outflows for sales and general administration 300 . income tax paid on operating income 50 acquisition of operating fixed assets in cash 520 cash interest paid (after tax) 30 cash outflow to redeem borrowings 150 . cash dividends to common shareholders 100 cash raised by borrowing new loans 300