Statement of Cash Flows

Question 1

Operating activities (indirect method)

Answer 1

Profit before tax = after deducting finance interest costs
add depreciation charges for the year
add loss on disposal of a non-current asset, or deduct profit on disposal of non-current assets
deduct dividends received (shown in investing activities)
add finance costs
add decrease in inventories, or deductincrease in inventories
add decrease in trade and other receivables, or deduct increase in trade and other receivables
add increase in trade and other payables, or deduct decrease in trade and other payables
EQUALS Cash generated by operations
deduct interest paid in a period
deduct tax paid on income in the period
EQUALS Net cash from operating activities