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Cash flow statement (Indirect Method)
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- 2. Activities under Cashflow Operating Activity Financial Activity Investing Activity
- 3. Operating Activity DirectMethod Indirect Method
- 4. Operation Cash flowIndirect Method Net profit before tax and Extradinory items (A) Add : Non Cash flow and Non Operating items debited to Profit and Loss Account (B) i) Depriciation Ii) Amortisation of Intangiable assets Iii) loss of sale of Fixed Assets Iv) Loss on sale of Investments V) Provision for Tax Vi) Divident Paid Less : Non Cash flow and Non Operating items credited to Profit and Loss Account (C) i) Profit on sale of Fixed Assets Ii) Profit on sale of Investments Less : Net Tax paid (Tax Paid/ Tax Refund) (D) Less : Extradinory items(E) Operation cash flow before Working Capital Changes : (A)+(B)-(C)-(D)-(E)
- 5. Operation Cash flow(1)= Operating Cash flow before working capital changes + Effect of Changes in working Capital Effect of Changes in working Capital : Decrease in Current Assets + Increase in Current liabilities – Increase in Current Assets – Decrease in Current Liabilities.
- 6. Operation Cash Flowfrom Investing activity (2) Cash Inflows Cash flow from sale of assets ( Land , Building, Goodwill) Cash flow from sale of Shares, Debentures of other Companies Receipt of Loans Given Cash outflows Purchase of Fixed assets (Tangible Assets) Purchase of Intangible assets Purchase of Investments ( Shares, Debentures) Purchase of Government bonds Loan to third party
- 7. Operation Cash Flowfrom Finance Activity (3) Cash Inflows I) issue of Equity and preference share capital Ii) Issuance of Debt Cash Outflows i) Buy back of shares Ii) Redemption of shares
- 8. Cash Flow atthe end of the period = (1)+(2)+(3)+Opening Cash and Cash Equivalents at the beginning of the year.