CASH FLOW STATEMENT

Net Cash Flow

Net cash = Profit after Non cash + Non cash flow tax revenues expenses In practice, analysts use the following approximation: Net cash = Profit after + Depreciation - Amortisation Flow tax

Statement of Cash Flow

Sources of Cash Increase in liabilities and owners equity Decrease in assets (other than cash)

Uses of Cash
Decrease in liabilities and owners equity Increase in assets (other than cash)

Statement Of Cash Flow

Operating Cash inflows from operations Cash outflows from operations = Cash flow from operations + Investing Cash inflows from investing activities Cash outflows from investing activities = Cash flow from investing activities + Financing Cash inflows from financing activities Cash outflows from financing activities = Cash flow from financing activities = Net cash flow for the period

SOURCES
FINANCING
OPERATING

USES
CAPITAL
RES. & SURPLUS

CAPITAL
RES. & SURPLUS

FINANCING
OPERATING

LOANS
CURRENT LIABILITIES & PROVISIONS FIXED ASSETS INVESTMENTS INVENTORIES DEBTORS

LOANS
CURRENT LIABILITIES & PROVISIONS FIXED ASSETS INVESTMENTS INVENTORIES DEBTORS

INVESTMENT INVESTMENT OPERATING OPERATING

CASH FLOW STATEMENT FOR HORIZON LTD, FOR THE PERIOD 1.4.20X0 TO 31.3.20X1
(Rs. in million) (A) Cash Flow from Operating Activities Net profit before tax and extraordinary items Adjustments for Interest paid Depreciation Operating profit before working capital changes Adjustments Debtors Inventories Advances Trade credit Advances Provisions Cash generated from operations Income tax paid Cash flow before extraordinary items Extraordinary item Net cash flow from operating activities 68 21 30 119 (46) (33) 05 15 07 02 69 34 35 35 (Contd.)

(Contd.) (Rs.in million) (B) Cash Flow from Investing Activities Purchase of fixed assets Net cash flow from investing activities (C) Cash Flow from Financing Activities Proceeds from term loans Proceeds from inter-corporate deposits Interest paid Dividend paid Net cash flow from financing activities (D) Net Increase in Cash and Cash Equivalents (A) + (B) + (C) Cash and cash equivalents as on 1.04.20x0 12 44 (21) (28) 07 04 06 (38) (38)

Cash and cash equivalents as on 31.03.20x1

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According to AS 3 every company should along with the Balance sheet and Profit and Loss Account provide information on Cash flows of the organization during the period

CFS profits information about the changes in cash and cash equivalent of an enterprise. It identifies cash generated from operations, CFS is prepared to explain the cash movements between two points of time.

Meaning of Cash Flows

Cash flows are inflows and outflows of cash and cash equivalents.

When does the flow of Cash arise?

It arises when the net effect of a transaction is either to increase or to decrease the amount of cash or cash equivalents.
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MEANING OF CASH FLOW STATEMENT

The Cash Flow Statement means the statement of changes in Cash and Cash equivalents.
It shows the following for the period covered by it:

Net Cash flows from Operating Activities

Net Cash flows from Financing Activities

Net Change in Cash and Cash Equivalents

Net Cash flows from Investing Activities

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Meaning of 'Cash'
Cash comprises Cash on hand and Demand Deposits with Banks.

Meaning of Cash Equivalents

Cash Equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
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Computation of Cash and Cash Equivalents

Cash and Cash Equivalents at the Beginning of Period Rs. Cash in hand 5,000 Cash at Dena Bank 10,000 Marketable Securities 3,000 Less: Bank Overdraft ( 10,000) Less: Cash Credit (9,000) (1,000)
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Meaning of Operating Activities

(a)These are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities. (b) Cash flows from operating activities are primarily derived from the principal revenue-producing activities of the enterprise.

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Cash Flows from Operating Activities

Cash Inflows
Cash Sales Cash Receipts from Debtors Trading Commission Received B/R collected

Cash Outflows
Cash Purchas Cash Paid to Suppliers Wages Paid Mfg. Oh.Paid Admin.& Selling Expenses
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Meaning of Investing Activities

Investing activities are the acquisition and disposal of long-term Assets and other Investments not included in Cash equivalents.

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Cash Flows from Investing Activities

Cash Inflows Sale of..
-Machinery
-Land & Building -Furniture & Fixtures - Investments

Cash out flows

Purchase of.
-Machinery -Land & Building -Furniture & Fixtures -Investments

-Non Operating

Incomes

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Meaning of Financing Activities

These are the activities that result in changes in the size and composition of the owners capital and borrowings of the enterprise. Cash flow from financing activities is ascertained by analyzing the changes in Equity Share Capital, Pref. Share Capital, Debentures and others borrowings.

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Cash Flows from Financing Activities

Cash Inflows due To Issue of -Equity Share Capital
- Pref. Share Capital - Debentures -Raising of other borrowings.

Cash Outflows
-Buy back of Equity Shares

-Redemption of Preference Shares

-Repayment of Long-term borrowings -Dividend paid - Interest paid
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