How is Pepsi's transaction reflected in cash flow?



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Hello Binny Sir,

Thanks for answering my earlier question. Here is my another confusion which is rather mathematical in nature.
In the module of Cash Flow Statement Basics, there is a last question on Pepsi taking $200 million loan on 10% interest thereby decreasing the cash flow from investing by 200 million and cash flow from financing increasing by 180 million.
If there is an interest on loan, shouldn't it be 220 million??

Please guide and pardon me for asking such a silly question!

Thanks,
Shubham


1 Answer(s)


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Shubham,
First cash flow from financing will increase by $200mn due to the loan (cash inflow), then in the same period cash flow from financing will decrease by $20mn due to the interest payable (cash outflow). Hence net of $200mn inflow - $20mn outflow is $180mn. Is that clear ?

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