Analyzing the Financing Cash Flow

Running head: ANALYSING THE FINANCING CASH FLOW
ANALYSING THE FINANCING CASH FLOW
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ANALYSING THE FINANCING CASH FLOW
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Explain what this section of the cash flow represents
This section of the cash flow represents financial activities. Financing activity of the cash
flow includes all the cash inflows and outflows associated with the raising and the paying money
related to the financing element which is either for raising debt or equity and paying loan
repayment, cash interest and return on equity. The raising of capital can be mainly because of 2
motives either too due to any capital investment, which can be in the form of any asset, project
etc. Or can be to fulfil the expenditure of the company which can be classified into the various
activities. Cash flows are an integral part of company financials mainly to the fact that
accounting work on a non-cash basis which means the element of credit and this element of
credit did not reflect the true cash flow position of the company.
The cash flows from financing activities of the Big Yellow Group plc. Be composition to
19,855 from the previous year's -24,053, which shows the company had received more cash with
regards to financing activity than the previous year. And the main change was the raising capital
through equity issuance of 65,962 then of the previous year of 969. Then also paying more
dividend, which is in line with the fact that they had raised equity1.
ISSUE OF SHARE CAPITAL:
The company has raised the capital of 65,962 through the issue of shares which shows
that the company is increasing its reliance on equity investors for financing purpose. In
September the company had issued 7.2 million shares costing each share of
£930. The company had raised £65.3 million. This raise has both the aspect one
1 Corporate.bigyellow.co.uk. (2020). [online] Available at:
https://corporate.bigyellow.co.uk/application/files/7215/6085/0959/BY_AR2019.pdf [Accessed 29 Feb. 2020].

ANALYSING THE FINANCING CASH FLOW
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increases the confidence of investors as now debt holders own less component holding, which is
beneficial in case of liquidation. Secondly, the motive to raise this much amount of capital also
determines either it's a good decision or not and if it's for any future projects and expansion with
positive NPV then good decision. At last, the % of holding of the current shareholders will
decrease as profits will now be divided among more shareholders than previously used to be2.
PAYMENT OF FINANCE LEASE LIABILITIES:
The payment for the finance lease liability didn't materially as it's changing just by
negative 3% which is the decrease in payment, as the liability of finance lease was higher in
initial years and then subsequently decrease in later years due to decrease in the principal amount
on which the rate is applied. This decrease in payment also shows that the company didn't have
invested further in taking any asset on lease term, which without further information, is not
possible to conclude3.
EQUITY DIVIDEND PAID:
The equity dividend payment increases significantly to 52,058 which is 13% from the
previous year which is not inlined with the increase in the equity raise which is an increase in 67
2 Mohagheghi, V., Mousavi, S.M. and Vahdani, B., 2017. Analyzing project cash flow by a new interval type-2
fuzzy model with an application to construction industry. Neural Computing and Applications, 28(11), pp.3393-
3411.
3 Hanselaar, R.M., Stulz, R.M. and Van Dijk, M.A., 2019. Do firms issue more equity when markets become more
liquid?. Journal of Financial Economics, 133(1), pp.64-82.