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Cash Flow Statement - By Inderjit Dagar

Cash Flow Statement - By Inderjit Dagar

Published in Economy & Finance , Business
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  • 1. CASH FLOW STATEMENT (AS 3 –REVISED ) Limitation of AS3 1 Flexibility in definition of funds 2 Absence of a standard format 3 Absence of cash flows for different activities Usefulness of the cash flow statement 1 The ability to generate cash flows 2 The enterprise’s ability to pay dividends and meet its commitments 3 The reasons for the difference between net income and cash inflows from operating activities 4 The investing and financing cash transactions during the year
  • 2. Rs. Rs. --- --- --- --- --- --- xxx --- --- --- --- -- --- --- --- A Cash flows from operating activities Net profit before tax and extraordinary items Adjustment for : Depreciation Foreign exchange Investments Gain or loss on sale of fixed assets Interest /dividends Operating profit before working capital changes Adjustment for : Debtors Bill receivables inventories Prepaid expenses Outstanding income Trade payables Prepaid income Outstanding expenses
  • 3. xxx xxx xxx --- --- --- --- --- --- --- --- --- --- Cash generation from operation Interest paid Direct taxes Cash before extraordinary items deferred revenue Net cash from (used in ) operating activities B Cash flows from Investing activities Purchase of fixed assets Sale of fixed assets Sale of investments Purchase of investments Interest received Dividends received Loans to subsidiaries Net cash from (used in ) Investing activities C Cash flows from financing activities
  • 4. Xxx Xxx Xxx xxx --- --- --- --- C Cash flows from financing activities Proceeds from issue of shares capital Proceeds from long term borrowings Repayment to finance /lease liabilities Dividends paid Net cash from (used in ) financing activities Increase (decrease) in cash and cash equivalents (A+B+C) Cash and cash equivalents at the beginning Cash and cash equivalents at the end of year
  • 5. Prepare a cash flow statement 2005 23000 14600 1800 3200 3800 6200 9800 62400 2004 20000 15000 1800 4200 3800 4200 8400 57400 Assets Machinery Building Land Cash Debtors B/R Stock 2005 8000 25000 2600 13400 6400 4600 400 1200 800 62400 2004 10000 22000 2000 10400 7000 3800 500 1000 700 57400 Liabilities 10%Pref. share cap Equity capital Securities premium P&L Account 12% Debenture Creditors B/P Provision for tax Dividends payable.