Q. How will you interpret the cash flow statement , if :
Opening balance of cash & Cash equivalent = Rs. 5,074
Cash flow from operating activities = Rs, 2,269

Cash flow from investing activities = Rs 1,221
Closing balance of ​cash & Cash equivalent = Rs. 857.
Cash flow from financing activities= Rs. 5,265

Dear Student
Net Cash Flow = Closing - Opening Cash   (857 - 5074)                                      (4,217)
From the question we can see that the major portion of cash requirement of the company is fulfilled by Finance, i.e company has made an arrangement of cash from its finance and this shows that company is unable to generate enough cash from its main business i.e operating activities so that its requirements are fulfilled.

Since the company is making cash losses and funding its cash requirements from Finance, it is indicating the bad health of the company.
Therefore Company is not working efficiently and needs to improve more in order to increase cash profits and cash flow from operating activities.
Please note that as the specific transactions in particular activities are not known, the above judgment is based on assumption that company is working under normal conditions.



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