Statement Of Cash Flow Flashcards
What three areas must cash flow be analysed between?
operation
investing
financing
what are operating activities?
the main revenue producing activities of the entity that are not investing or financing activities, so operating cash flows include cash received from customers and cash paid to suppliers and employees
what are investing activities?
acquisition and disposal of long-term assets and other investments that are not considered to be cash equivalents
what are financing activities?
activities that alter the equity/ capital and borrowing structure of equity
what is part one of the Reconciliation of operating profit, to Net cash flow from operating activity?
operating profit (profit before deduction of tax and interest maybe dividend)
Does the reconciliation of operating profit go on the cash flow statement?
Yes it is the operating activities section
what is part 2 of the Reconciliation of operating profit, to Net cash flow from operating activity?
ADD back depreciation (not real cash expense)
what is part 3 of the Reconciliation of operating profit, to Net cash flow from operating activity?
ADD loss on disposal/ Minus profit
as actual proceeds will be shown in investing section
what is part 4 of the Reconciliation of operating profit, to Net cash flow from operating activity? (inventory)
ADD decrease in inventory/ Minus increase in inventory
Decreased stock improves cash flow as less cash tied up so more cash available
what is part 5 of the Reconciliation of operating profit, to Net cash flow from operating activity? (trade receivables)
ADD decrease in trade and other receivables
MINUS increase in trade and other receivables
decrease shows debts collected quicker so improved cash flow
what are other receivables/ payables?
accruals and repayments
what is part 6 of the Reconciliation of operating profit, to Net cash flow from operating activity? (trade payables)
ADD increase in trade payables
MINUS decrease in trade payables
Increase suggests business is delaying payment to suppliers improving short time cash flow
what is part 7 of the Reconciliation of operating profit, to Net cash flow from operating activity?
Equals cash (used in)/from operations
what is part 8 of the Reconciliation of operating profit, to Net cash flow from operating activity?
DEDUCT finance costs/ interest paid in the year
Loans and overdraft actually paid (might need working out)
what is part 9 of the Reconciliation of operating profit, to Net cash flow from operating activity?
DEDUCT taxation paid
Tax actually paid on income for the year (might need working out)
What goes on the cash flows from investing activities section?
Purchase of NCA (MINUS)
Proceeds from sale of NCA (ADD)
Interest received (ADD)
Dividends received (ADD)
Net cash(used in)/ from investing activities
What goes on the cash flows from financial activities section?
Proceeds from issue of share capital (ADD)
Repayment of share capital (MINUS)
Proceeds from long term borrowing (ADD)
Repayment of long term borrowing (MINUS)
Dividends paid (MINUS- amount paid in year)
Net cash (used in)/ from financing activities
How will revaluation of non-current assets be treated in a cash flow statement?
Book entry so no cash movement it will not be entered
What will the treatment of a bonus issue of shares be on the cash flow statement?
Don’t cause any movement of cash so wont be shown in cash flow
what concept is used in the cash flow statement?
Money measurement (only money transactions
What must you consider when looking at positive cash flow from operating activities section?
sub total cash (used in)/from operations (cash from revenue)
What can you make a comparison between on the cash flow statement?
profit and cash generated from operations and talk about major differences
What can the net cash (used in)/from operations tell you?
if its a positive figure it shows that the company had been bale to meet its interest and tax obligations
What does the investing section of the cash flow statement show?(generally)
amount of investment during the year
should be a link between cost of investment and increase in loan/share capital
