Cash flows Flashcards
What is a cash equivalent?
A short term highly liquid investment that is readily convertible into known amounts of cash.
Non cash adjustments (5)
Depreciation Amortisation Profit on disposal of a NCA Loss on disposal of a NCA Movement in provision
What is the indirect method of cash flows?
Starts with profit and adjusts for
1) non cash items
2) items dealt with elsewhere
3) working capital movements
What are the working capital adjustments?
Trade payables change
Trade receivables change
Inventory change
Why are working capital adjustments done on cash flows?
Because profit is based on accruals basis but cash flow needs to be based on cash
When working out how much has been paid on tax/payables or received on receivables what is the sum for bfw/cfw/current year
+ Bfw
+ Current year
- Cfw
What are the items in investing activities?
Cash paid out for non current asset purchases
Cash proceeds received from the sale of non current assets
Non cash adjustments in the operating activities
Depreciation
Profit/loss on sale of non-current assets
What cash flow adjustments are in financing activities?
Cash proceeds from issuing shares
Cash proceeds from borrowing
Repayments of borrowing
Dividends paid
What part of the cash flow is dividends received in?
Investing activities
What part of the cash flow is depreciation in?
Operating activites
What part of the cash flow do share issue proceeds go in?
Financing activities
What part of cash flow does loan repayments go in?
Financing actuvites
What part of the cash flow does interest paid go in?
Operating activities
Will financing and investing activities e the same in the cash flow if indirect or direct are used?
Yes it’s only operating that changes
Is interest paid added or taken away in operating activities?
Added
Is tax paid in operating activities the charge for the year or the actual cash paid worked out by using brought forward and carried forward as well as charge for the year?
Actual cash using brought forward, current year and carried forward
On cash flow in operating activities, what goes in adjustments for:
Depreciation Loss on disposal Finance cost Inventory Receivables Payables
In cash flow in operating activities, what goes under cash generate from operations.
Finance cost
Tax paid
