Cash Flow stmnt

Question 1

Layout

Answer 1

Profits before taxation

\+ Operating activities 
\+ Investing activities (usually neg as purchases > proceeds) 
\+Financing activities 
\+Net increase in cash 
\+Beg cash
=End cash (given)

Question 2

Profit on disposal
Depreciation
Interest expense

Answer 2

Add to operating activities

Question 3

Increase in inventory
Increase in trade receivables
Decrease in trade payables

Answer 3

Decreased from operating expenses

Question 4

Proceeds from sale of equipment

Purchase of equipment

Answer 4

(Net investing activities)

Question 5

Proceeds from SP
Process of long term borrowing
(Repayment of long term borrowings)
(Dividends paid)

Answer 5

Financing activities

Question 6

Calculating net cash increase

Answer 6

Net cash increase = new cash - old cash

Question 7

Purpose of cash flow

Answer 7

Quality of profit
Info on liquidity and viability
Forecast cash flows for valuation purposes