Complete Ind AS-7 Presentation with examples

1. Ind AS-7
Statement of Cash Flows

2. What we will discuss
• Advantages of Statement of Cash Flow.
• Where cash Flow Lacks?
• Some examples and there analysis
• Literature of the IND AS -7 and examples on the same.
• Disclosures.

3. Why Statement of Cash Flow ?
• To assess the ability of the entity to generate cash and
cash equivalents and the needs of the entity to utilise
those cash flows.
• Helps to evaluate:
o the changes in net assets of an entity,
o its financial structure (including its liquidity and solvency)
o its ability to affect the amounts and timing of cash flows in
order to adapt to changing circumstances and opportunities
• the comparability of the reporting of operating
performance by different entities

4. Where cash flow lacks?
• It does not shows the future ability to generate the cash
flows.

5. Statement of cash flow- Infosys

6. Statement of cash flow- TCS

7. Comparison of cash flow statement of two Peers
TCS Infosys
Condensed Detailed
N.A. Intercompany loan given taken
to financing activity which is
wrong it should be investing
Conflicting words Payment
towards “contingent
consideration pertaining to
acquisition if payment is made
there is no contingency
Restricted cash shown as
investing activity
Restricted cash taken to cash
but shown separately
Financing lease financing
activity
Taken in to operating activity
Interest and dividend received
shown separately
Clubbed which is wrong as per
Ind AS

8. Statement of cash flow- HUL

9. Statement of cash flow- HUL

10. Statement of cash flow- ITC

11. Comparison of cash flow statement of two Peers
HUL ITC
Breakup of the current asset
and liability
No breakup
Exceptional Items- amount
paid for restructuring activities
No such item

12. Cash flow statement of financial Institution

13. Cash flow statement of financial Institution
Continued…
Tier 1 and 2
borrowings

14. (5,000)
-
5,000
10,000
15,000
20,000
25,000
TCS Infosys ITC HUL Yes
Bank
Profit after tax 22,883 15,786 9,845 4,082 2,539
Cash Flow from operating
activity
17,996 9,399 9,251 3,973 (363)
% age 79% 60% 94% 97% -14%
Profit after tax vs cash flow from operating activity

15. Cash
cash on hand
demand deposits
Cash
equivalent
highly liquid
investments
readily
convertible to
known amounts
of cash
subject to an
insignificant risk
of changes in
value

16. Example: Cash & cash equivalent
• Investment in equity with taken for short term purpose:
• No equity investment are not cash and cash equivalent
• Investment in equity with redemption with in 3 month
• Yes
• Investment in derivatives
• No because highly prone to risk.

17. Statement of cash flow
Shows flow of cash and
cash equivalent
Operating activities
principal revenue-
producing activities
Investing activities
acquisition and disposal
of long-term assets and
other investments not
included in cash
equivalents
Financing activities
activities that result in
changes in the size and
composition of the
contributed equity and
borrowings of the entity

18. Complicated Examples- operating
activities
• Payment for the asset acquired for the purpose of leasing
• Exceptional item taken in to Statement of profit and loss
• Payment of tax until related to investing or financing
activity
• Securities held for trading purposed
• What about the hedges?
• Those should be dealt in the same way as the hedge
instrument is being delt.

19. Complicated Examples-
Investing activities
• Loan given to subsidiary
• cash receipts/payment from futures contracts, forward
contracts, option contracts and swap contracts except
when the contracts are held for dealing or trading
purposes, or the receipts are classified as financing
activities.
• Interest and dividend received on the investments
• Capital gain taxes

20. Complicated Examples-
Financing activities
• Interest paid
• Dividend paid
• Dividend distribution tax

21. Disclosures
• Components of cash and cash equivalents
• reconciliation of the amounts in its statement of cash
flows with the equivalent items reported in the balance
sheet
• Commentary on the restricted cash