12.

8
ANALYSIS OF THE
CASH FLOW STATEMENT
 Cash Flow Statement for the month ended 30 June 2015
$ $
Cash Flows from Operating Activities
Cash sales 50000
Receipts from debtors 10000
GST collected 5000
Cash purchases of stock (30000)
Advertising (3000)
Wages (14000)
Operating
Cleaning (3000)
Activities
GST paid (4000)
Net Cash Flow from Operating Activities 11000
Cash Flows from Investing Activities
Sale of office equipment 2000
Investing Sale of furniture 4500
Activities Purchase of computer (3000)
Purchase of vehicle (5500)
Net Cash Flow from Investing Activities (2000)
Cash Flows from Financing Activities
Capital contributions 5000
Loan NAB 15000
Drawings (10000) Financing
Loan repayments (11000) Activities
Net Cash Flow from Financing Activities (1000)
Net increase (decrease) in cash 30300
Closing Cash at start of period 2000
Section Cash at end of period 32300
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Cash Balance

Cash comes in from

Operatin selling goods and
Non-Current
Borrowings (loans)
g services:
Assets: Cash Outflows
Capital
Property
Cash sales Money leaves the
contributions
Vehicles business in 3 ways
Debtor collections
Investing
GST received
Equipment

Financing
Cash is spent on
Cash Inflows running
buying
LoanNon-Current
the business
repayments
Money comes into on a daily basis
Assets
Drawings
the business from Property
Wages
3 sources Creditor payments
Vehicles Operatin
g
Stock purchases
Equipment
Expenses paid
Michael Allison, Trinity Grammar School.
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Investing
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Net Cash
Net Cash Inflow
Outflow The business has cantbeen
raised
spent
able to generate
generate
generated
money from:
on:
onnet
cash
non-current
cash
bynet
Operatin Repaying
cash
from
selling
assets
Borrowing
its
fromnon-current
day-to-day
its loans
day-to-
from to
g daythe
operations
assets
banks
operations
bank
Drawings
ThisCapital
is good because
to the
Activities
It will
This
these
contributions
owner(s)
can
is have
will
goodbe
beto
spent
because
used
get money
from
on:
to it
the
from:
may
generate
Buying
have
owner(s)
sold
future
non-current
Selling
unproductive
revenues
Thisassets
is good and
non-current
because:
assets
cash
Investing The
ThisLoan
assets
is not
firm
repayments
sustainable
has
Activities reduced
But
because:
Drawings
Borrowing
this is also itsmoney
bad
debtas it
not
is Capital
The
Interest
sustainable
firm has
expenses
because:
contributions
increased
will be lower its debt
The
Loans assets
owners
mustsoldbe
have
Financin wont generate
repaid
made money
with interest
from
g the
future
The business
owner(s)
cash cant
Activities Michael Allison, Trinity Grammar School.
continue
The firm will to make
run out
Authors permission required for external use
of assets to sell
capital
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Ideally Cash Balance

OPERATING
Operatin ACTIVITIES
g

Investing

Financing

INVESTING
ACTIVITIES Operatin
g
FINANCING
ACTIVITIES
Michael Allison, Trinity Grammar School.
Authors permission required for external use

Investing
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Situation #1 Cash Balance

OPERATING
Operatin 100,000
ACTIVITIES
g

Investing

Financing

INVESTING
(60,000)
ACTIVITIES Operatin
g
FINANCING
(20,000)
ACTIVITIES
Michael Allison, Trinity Grammar School.
Authors permission required for external use

Investing
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Situation #2 Cash Balance

OPERATING
Operatin 100,000
ACTIVITIES
g

Investing FINANCING
40,000
ACTIVITIES

Financing

INVESTING
(130,000)
ACTIVITIES Operatin
g

Michael Allison, Trinity Grammar School.

Authors permission required for external use

Investing
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Situation #3 Cash Balance

OPERATING
100,000
ACTIVITIES
Operatin
g
INVESTIING
60,000
ACTIVITIES
Investing

Financing

Operatin
g
FINANCING
(150,000)
ACTIVITIES
Michael Allison, Trinity Grammar School.
Authors permission required for external use

Investing
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Situation #4 Cash Balance

Operatin
g
INVESTIING
30,000
ACTIVITIES
Investing
FINANCING
30,000
ACTIVITIES
Financing
OPERATING
(50,000)
ACTIVITIES

Operatin
g

Michael Allison, Trinity Grammar School.

Authors permission required for external use

Investing
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Enron Net Profit ($m)
1,000 979
Went bankrupt in 2001 893
900

800
703
700

600

489 493
500
440
400

300

200
105
100

-
Michael Allison, Trinity Grammar School.
1994 1995 1996 1997
Authors permission required for external use 1998 1999 2000
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Enron Net Cash Flows ($m)
6,000
4,779

4,000 Operating
Activities
2,456 ($m)
2,266
2,000
1,849 1,640
1,228
884 Investing
331 571
211 Activities
- ($m)
1996 1997 1998 1999 2000
-1,074
-2,000 Financing
-2,146 Activities
($m)
-4,000 -3,507
-3,965
-4,264

-6,000 Michael Allison, Trinity Grammar School.

Authors permission required for external use
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Lehman Brothers Net Profit ($m)
4,500
4,192
Went bankrupt in 2008
4,000
3,941

3,500
3,260

3,000

2,500 2,369

2,000
1,699
1,500
1,255
975
1,000

500

-
Michael Allison, Trinity Grammar School.
2001 2002 2003 2004
Authors permission required for external use 2005 2006 2007
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Lehman Brothers Net Cash Flows ($m)
60,000
48,592

40,000 38,255 Operating

Activities
($m)

20,000
12,112
Investing
Activities
- ($m)
-447
2005 -792
2006 2007
-1,698
-12,205
-20,000 Financing
Activities
($m)
-40,000 -36,376
-45,595

-60,000 Michael Allison, Trinity Grammar School.

Authors permission required for external use
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
ABC Learning:
Founded by E d d i e G r o v e s
Grew from o n e c h i l d c a r e c e n t r e i n
1988
At its peak, ABC Learning was opening
up f o u r n e w c e n t r e s p e r w e e k

Michael Allison, Trinity Grammar School.

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 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
ABC Learning No. of centres at year end
2,500
2,238

2,000

1,500
1,257

1,000

660
500
327
187
43 94
-
2001 2002 2003 2004
Michael Allison, Trinity Grammar School.
Authors permission required for external use
2005 2006 2007
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
ABC Learning Net Profit ($m)
160.0
Went bankrupt in 2008 143.1
140.0

120.0

100.0

81.0
80.0

60.0 52.3

40.0
21.4
20.0 12.1
3.3 6.8
-
2001 2002 2003 2004
Michael Allison, Trinity Grammar School.
Authors permission required for external use
2005 2006 2007
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT

Michael Allison, Trinity Grammar School.

Authors permission required for external use
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
How could ABC Learning go b r o k e i n 2 0 0 8 when its p r o f i t s and c a s h
were growing?
160.0
143.1
140.0
123.1
120.0 Net Profit
($m)
100.0
88.0
81.0 Net
80.0 Increase/
Decrease
60.0 52.3 in Cash
45.7 ($m)
40.0

20.0

-
2005 2006
Michael Allison, Trinity Grammar School.
Authors permission required for external use
2007
 12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
ABC Learning Net Cash Flows ($m)
2,000.0

1495.6 Operating
1,500.0
Activities
($m)
1,000.0 850.1

500.0
456.5 Investing
206.9 Activities
43.2 89.2
($m)
-
2005 2006 2007
-500.0 Financing
-454.0
Activities
-1,000.0 -851.3 ($m)

-1,500.0
-1579.4
-2,000.0 Michael Allison, Trinity Grammar School.
Authors permission required for external use
 TASK

Homewor
In-class
k
Ex12.7 X
Ex12.8 X
Ex12.9 X
Ex12.10 X
Case study X

Michael Allison, Trinity Grammar School.

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