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Lending Skills > Cash Flow > Flashcards

Cash Flow Flashcards

1
Q

Calculate the working capital movement as it shows in the cash flow statement from the following:

Year 1		Year 2
(£k) 		(£k)
Stock 			150 		165
Debtors 		220 		190
Creditors 		200 		175
  • £(70)k
  • £(10)k
  • £10k
  • £20k
A

£(10)k

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2
Q

Sales are £15,000k and net profit is £3,500k. Stock days are currently 45 days and creditor days are 30. What will be the impact on repayment capacity if stock days reduce to 40 days and creditor days increase to 40 days? (Calculate creditor and stock days with reference to sales and assume all other items remain constant)

  • £(615)k
  • £205k
  • £410k
  • £615k
A

£615k

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3
Q

Using the figures in the table calculate how much tax was paid in Year 2.

Year 1 Year 2
(£k) (£k)
Balance Sheet: Tax Creditor 450 425
Profit and Loss: Tax Charge 500 550

  • £325k
  • £400k
  • £475k
  • £575k
A

£575k

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4
Q 
Use the relevant figures in the table to calculate CFADS.
£k
EBITDA						2,900
Increased working capital requirement		   650
Interest paid					   175
Tax:					
Charged					   750
Paid           					   560
Dividend:
Charged					   300
Paid						   200
  • £1,025k
  • £1,315k
  • £1,490k
  • £2,325k
A

£1,490k

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5
Q

Which of the following will increase a working capital requirement?

  • Decrease in stock days
  • Increase in debtor days
  • Increase in creditor days
  • Decrease in raw material days
A

Increase in debtor days

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6
Q

Which one of the following will have a positive impact on CFADS?

  • Reducing cost of goods sold
  • Raising additional equity from shareholders
  • Increasing rate of depreciation on fixed assets
  • Reducing the time taken to pay suppliers
A

Reducing cost of goods sold

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7
Q

Using the figures below, calculate CFADS in year 2.

Year 1		Year 2
£k		£k
EBITDA 			2,000		2,650
Stock 			350 		300
Debtors 		400 		420
Creditors 		500 		490
Corporation Tax Paid 	300 		310
Dividends Paid 		400		500
Capex			400 		400
  • £1,420k
  • £1,460k
  • £1,520k
  • £2,460k
A

£1,460k

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8
Q

When analysing customer forecasts, what technique can be used to challenge more than one assumption at the same time?

  • Scenario planning
  • Factual questioning
  • Sensitivity analysis
  • Management simulation
A

Scenario planning

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9
Q

Which one of the following would be included in the Profit & Loss Account as non-cash expense?

  • Loss on disposal of Fixed Asset
  • Share of profits due to associates
  • Release of provision no longer required
  • Sales for which customers have not paid at year end
A

Loss on disposal of Fixed Asset

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10
Q

Which one of the following would be included in the Profit & Loss Account as non-cash Income?

  • Loss on disposal of Fixed Asset
  • Share of profits due to associates
  • Release of provision no longer required
  • Sales for which customers have not paid at year end
A

Release of provision no longer required

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11
Q 
Based on the figures below, calculate the adjustment made to EBITDA to arrive at the figure for CFADS in the Year 2 Cash Flow statement?
		YEAR 1		YEAR 2
STOCKS		£150,000	£90,000
DEBTORS	£  70,000	£50,000
CREDITORS	£  80,000	£70,000
  • (£70K)
  • £30K
  • £50K
  • £70K
A

£70K

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12
Q

Which one of the following would have a positive impact on repayment capacity?

  • Increasing debtor days
  • Decreasing operating asset utilisation
  • Decreasing variable costs
  • Increasing stock days
A

Decreasing variable costs

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13
Q

Which one of the following would have the least impact on repayment capacity?

  • Decrease in Operating Margin
  • Decrease in specific Bad Debt Provision as a percentage of Sales
  • Increase in Capital Expenditure as a percentage of Turnover
  • Increase in Net Working Assets as percentage of Sales
A

Decrease in specific Bad Debt Provision as a percentage of Sales

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14
Q

Which one of the following scenarios regarding Capital Expenditure is likely to be an unusual trend you would wish to discuss with the management team?

  • A declining business with the Depreciation charge in excess of payments made to acquire new Fixed Assets
  • Capital Expenditure in line with the annual Depreciation charge for a mature business
  • Receipts for the Sale of Fixed Assets in excess of Purchases of Fixed Assets where the business is expanding
  • An expanding business with total Capital Expenditure in excess of the annual Depreciation charge and an increase in Operating Cash Flow
A

Receipts for the Sale of Fixed Assets in excess of Purchases of Fixed Assets where the business is expanding

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15
Q 
Calculate the Net working Capital movement based on the figures below.
			        £
Increase in Stock	£   555,000
Decrease in Debtors	£1,205,000
Increase in Creditors	£   785,000
  • (£1,435,000)
  • £ 135,000
  • £ 1,435,000
  • £ 2,545,000
A

£ 1,435,000

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16
Q

Which one of the following statements best describes what we mean by repayment capacity?
Ability to service and repay debt from:-

  • Present Profits
  • Present and future Profits
  • Present Cash Flows
  • Present and future Cash Flows
A

Present and future Cash Flows

17
Q 
Use the relevant figures below to calculate CFADS.  Assume no Capital expenditure was incurred.
					         £
EBITDA					£2,500,000
Increase in Working Capital Req		£   750,000
Interest Paid				£   250,000
Interest Received			£   100,000
Tax:- 
Charged				£   250,000
Paid					£   175,000
Dividends:-
Charged 				£   800,000
Paid					£   650,000
  • £550,000
  • £700,000
  • £925,000
  • £2,050,000
A

£925,000

18
Q

Which one of the following adjustments to Operating Profit would be made to arrive at EBITDA?

  • Amortisation
  • Payments to acquire Fixed Assets
  • Sale of Investments
  • Interest Received
A

Amortisation

19
Q

Based on the figures below, which amounts will be included in the Cash Flow and Profit & Loss Statements in relation to Stock?

Stock at start of Year £ 280K
Stock at Year End £ 350K
Purchases of Stock during Year £7,000K

  • Cash: £7,000K; Profit & Loss: £6,930K
  • Cash: £7,000K; Profit & Loss: £7,000K
  • Cash: £7,350K; Profit & Loss: £6,650K
  • Cash: £7,280K; Profit & Loss: £7,280K
A

Cash: £7,000K; Profit & Loss: £6,930K

20
Q

Which one of the following would be included as a non cash adjustment when calculating EBITDA in the Cash Flow Statement?

  • Interest paid
  • Dividends proposed
  • Net Working Capital movement
  • Profit or Loss on sale of Fixed Assets
A

Profit or Loss on sale of Fixed Assets

21
Q

A business made an Operating Profit of £500K. Depreciation was £40K. During the year it had disposed of Fixed Assets with a Net Book Value of £50K, for which it received £80K. Based on these transactions, what was the Net Cash generated?

  • £540K
  • £550K
  • £590K
  • £620K
A

£590k

22
Q

Below are Year 1 and Year 2 Corporation Tax amounts on the Balance Sheet of a company, together with the with the Corporation Tax amounts charged to the Profit & Loss Account.
Year 1 Year 2
Balance Sheet:- Tax Creditor £600K £700K
Profit & Loss:- Tax Charged £675K £650K

How much tax was paid in Year 2?

  • £550K
  • £575K
  • £650K
  • £750K
A

£550k

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