CASE 9 Solution

Question 2
Self-financing
 DIRECT METHOD:
80,000 – 20,000 – 18,000 – 7,000 = 35,000

 INFIRECT METHOD:
25,000 + 10,000 = 35,000

Profit + Expenses which don´t imply movements of funds – Incomes

/Revenues which don´t imply movements of funds

Question 3
Part of Self-financing that covers depreciation of assets = 10,000
Self-financing is composed from:
 Profit = 25,000
 Depreciation = 10,000

Question 4

Self-financing = 35,000

Total Resources created by the company = 35,000

∆ Cash = 35,000

1
Question 5

Minimum of legal Reserves = 20% 90,000 = 18,000

Credit to Legal Reserve = 10% 25,000 = 2,500
Maximum Dividend payable = Profit – Credit to Legal Reserve =
25,000 – 2,500 = 22,500

What is the real self-financing if it is paid the maximum dividend allowed

by Spanish regulation?

Real Self-financing = 35,000 – 22,500 = 12,500

So,

Total Self-financing = 35,000

∆ Cash = 12,500 Dividends = 22,500

(Real Self-financing)