CH15. Statement of Cash Flows: Indirect Method Flashcards
What are the 3 main titles?
Cash flows from
- operating activities
- investing activties
- financing activities
We do we start with?
Profit before tax from the P&L - need to adjust for non-cash items
Depreciation
Operating activities
- initial adjustment
expense so ADD back
Loss on disposal of PPE
Operating activities
- initial adjustment
expense so ADD back
Investment Income
Operating activities
- initial adjustments
income so SUBTRACT
Interest expense
Operating activities
- initial adjustments
expense so ADD back
Trade and other recievables
Operating activities
- working captial adj
Inventories
Operating activities
- working captial adj
Trade Payables
Operating activities
- working captial adj
Interest paid
Operating activities
- final adjusment
SUBTRACT
Income taxes paid
Operating activities
- final adjusment
SUBTRACT
Purchase of PPE
Investing activities
- not included in P&L profit before tax figure
need to SUBTRACT as cash is going out
Proceeds from the sale of equipment
Investment activities
- not included in P&L profit before tax figure
need to ADD back as cash in coming in
Interest recieved
Investment activities
- not included in P&L profit before tax figure
need to ADD back as cash in coming in
Dividends recieved
Investment activities
- not included in P&L profit before tax figure
need to ADD back as cash in coming in
Proceeds from issue of share capital
Financing activities
- not included in P&L profit before tax figure
need to ADD back as cash in coming in
Proceeds from long term borrowing
Financing activities
- not included in P&L profit before tax figure
need to ADD back as cash in coming in
Payment of finance lease liabilities
Financing activities
- not included in P&L profit before tax figure
need to SUBTRACT as cash is going out
Dividends paid
Financing activities
- not included in P&L profit before tax figure
need to SUBTRACT as cash is going out
can be showed in operating cash flow also, but usually here.
