Cash flow statement
- Note 6: cash and cash equivalents
Bank
Petty cash
Cash float
Savings account
Current portion of fixed deposit
Cash flows from operating activities
- Cash entering or leaving the business from its day to day activities
- Operating expenses = outflow of cash [in brackets]
- Operating income = inflow of cash
- Sales and cost of sales = not cash
- Look in: [income statement, current assets and current liabilities]
Cash flows from investing activities
- Cash entering or leaving from the purchase and sale of fixed & financial assets [fixed
deposit]
- Selling or buying assets
- Look in: [non-current assets]
Cash flows from financing activities
- Share capital and loans
- Buyback of shares as you decrease your share capital
- Look in: [equity & liability]
A = ASSET
D = DECEASE when an asset decreases its an inflow
I = INFLOW
L = LIABILITY
D = DECREASES when a liability decreases its an outflow
O = OUTFLOW
, CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 1
Interest paid
Dividends paid
Taxation paid
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of non-current assets
Proceeds from disposal of non-current assets
(increase)/decrease in financial assets
Cash generated from operations: Note 1
1. Reconciliation between profit before tax & cash generated from operation
- Remove the non-cash components from your profit - want to see what part of
profit is cash [eg. depreciation]
Profit before tax 99 000
how they could asked:
P
1. Number given (1 mark)
2. Given profit after tax & tax rate (2 marks)
3. Given tax and tax rate (2 marks)
4. Give you a ratio ROE or EPS (6-8 marks)
5. Nothing [must draw up retained income] (11)
Adjustment for: [+justments] - numbers are posivite [no brackets] 23 000
A
Interest expense [note 2 or income statement] I 14 000
Depreciation [note 3 or income statement] D 9000
Operating profit before changes in working capital 122 000
Changes in working capital 9200
Decrease in inventory (41 600 - 36 000) 5600
Increase in receivables (40 000 - 31 200) (8600)
Increase in payables minus SID (43 500 - 31 300) 12 200
Cash generated from operations 131 200
- Depreciation added to remove effect of non-cash item on profit [we originally subtracted
it from income statement]
- Note 6: cash and cash equivalents
Bank
Petty cash
Cash float
Savings account
Current portion of fixed deposit
Cash flows from operating activities
- Cash entering or leaving the business from its day to day activities
- Operating expenses = outflow of cash [in brackets]
- Operating income = inflow of cash
- Sales and cost of sales = not cash
- Look in: [income statement, current assets and current liabilities]
Cash flows from investing activities
- Cash entering or leaving from the purchase and sale of fixed & financial assets [fixed
deposit]
- Selling or buying assets
- Look in: [non-current assets]
Cash flows from financing activities
- Share capital and loans
- Buyback of shares as you decrease your share capital
- Look in: [equity & liability]
A = ASSET
D = DECEASE when an asset decreases its an inflow
I = INFLOW
L = LIABILITY
D = DECREASES when a liability decreases its an outflow
O = OUTFLOW
, CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 1
Interest paid
Dividends paid
Taxation paid
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of non-current assets
Proceeds from disposal of non-current assets
(increase)/decrease in financial assets
Cash generated from operations: Note 1
1. Reconciliation between profit before tax & cash generated from operation
- Remove the non-cash components from your profit - want to see what part of
profit is cash [eg. depreciation]
Profit before tax 99 000
how they could asked:
P
1. Number given (1 mark)
2. Given profit after tax & tax rate (2 marks)
3. Given tax and tax rate (2 marks)
4. Give you a ratio ROE or EPS (6-8 marks)
5. Nothing [must draw up retained income] (11)
Adjustment for: [+justments] - numbers are posivite [no brackets] 23 000
A
Interest expense [note 2 or income statement] I 14 000
Depreciation [note 3 or income statement] D 9000
Operating profit before changes in working capital 122 000
Changes in working capital 9200
Decrease in inventory (41 600 - 36 000) 5600
Increase in receivables (40 000 - 31 200) (8600)
Increase in payables minus SID (43 500 - 31 300) 12 200
Cash generated from operations 131 200
- Depreciation added to remove effect of non-cash item on profit [we originally subtracted
it from income statement]
