Abbott India

Cash Flows from financing activities

Dividend Paid
Because dividend payments are made from retained earnings, which are part of shareholders'
equity, board of directors must authorize them. Dividends are not costs because they are cash
distributions from after-tax net income to shareholders. Dividend payments to shareholders of
record as of record dates are usually announced in news releases by publicly traded firms.
Typically, private companies do not make dividend payments public.

Dividends are a crucial strategic choice because investors expect a company's quarterly
dividend to continue after it is declared. Dividend reductions or suspensions are often viewed
by investors as a sign of financial fragility. Management might announce one-time special
dividends to distribute cash to shareholders without generating an expectation of quarterly
dividend payments, giving it more choice over how to invest any surplus funds.

Cash Flow from Financing Activities For the year ended For the year ended
March 31, 2021 March 31, 2020
Dividend Paid (531.23) (138.12)

Analysis
The cash outflow has increased in 2021 as compared to 2020, this indicates that the company
has paid a higher dividend to its shareholders, the reasons for the same could be increase in
the retained earnings or higher returns as compared to the previous year. An increase of
393.11 Crores.

Dividend Distribution Tax Paid

Dividend distribution tax is a tax levied by the Indian government on Indian corporations
based on the amount of dividends paid to shareholders. According to the Union Budget of
India, the government is proposing to eliminate the dividend distribution tax in the financial
annual statement 2020.

Cash Flow from Financing Activities For the year ended For the year ended
March 31, 2021 March 31, 2020
Dividend Distribution Tax Paid - (28.39)

Payment of Lease Liabilities

A lease payment is the monthly equivalent of rent that is explicitly stipulated under a contract
between two parties, providing one party the legal right to use the other's real estate holdings,
manufacturing equipment, computers, software, or other fixed assets for a certain period.

Cash Flow from Financing Activities For the year ended For the year ended
March 31, 2021 March 31, 2020
Payment of Lease Liabilities (50.05) (50.05)
Analysis
In the case of Abbott India, the payment of lease liabilities remains the same for both years.

Interest Paid, other than on lease liabilities

 Cash Flow from Financing Activities For the year ended For the year ended
March 31, 2021 March 31, 2020
Payment of Lease Liabilities (0.51) (0.23)

In financing activities all cash activities are recorded which relate to non-current liabilities
and owner’s equity. Hence the Interest paid is recorded here which shows that there has been
an increase in the payment by 0.28 Crores.

Cash Flow from Financing Activities For the year ended For the year ended
March 31, 2021 March 31, 2020
Net cash flows used in financing activities (581.79) (216.79)

The negative cash flow from financing activity indicates that the company is paying down
debt, paying dividends, and repurchasing stock.

Net increase/(decrease) in cash and cash 73.13 8.13

equivalents (A+B+C)
Cash and cash equivalents at the beginning of the 145.14 137.01
year
Cash and cash equivalents at the end of the year 218.27 145.14

Net Increase in cash and cash equivalents

Cash equivalents are assets that can be converted to cash in a matter of hours or days. Higher
liquidity is equal to an increase in cash equivalents. A company with a greater liquidity ratio
is thought to be healthier and less risky. This company will also benefit from a decreased
interest rate, resulting in increased profitability.

Cash and Cash equivalents at the beginning and at the end of the year
Abbott started 2020 with 137.01 and 2021 with 145.14 but at the end the cash equivalents
were 145.14 in 2020 and 218.27 in 2021 determining that the company has a significant
increase in their liquid assets and similar increase in their profitability.

Conclusion
The cash flow statement includes the changes in cash and cash equivalents in operating
activities, investment activities, and financing activities, as well as the net change in cash and
cash equivalents in special treatments. It also includes the cash balance at the end of the
quarter. When the opening cash and cash equivalents are added to the net change, the result is
the cash and cash equivalent closing balance. The cash flow statement provides a clear
picture of how working capital is being used. In the above cash flow statement it is clear that
the company has raised profits and paid off debts efficiently hence the investment
opportunities are also very high for Abbott India.