NOTE: Current Assets - Current Liabilities = Working Capital

Cash Flow Analysis:

Q.1
A. Cash Flow from Operating Activities (Prepared by deducting expenses from
non-operating activities from Net Profit)
Net Profit = 68000-56000 = 12000
+

Depreciation = F.A.(this year)-F.A.(last year)-Assets Sold=400000-320000-

10000=70000
+

Provision for Tax = 9000

Transfer to General Reserves = 10000

- Profit on sale of fixed asset

= 2000

- Profit from investment = 500

+

Dividend paid = 40000

-------------------------------------------------------Cash flow from Operating Activities(before changes in working capital) = 138000

- Increase in current assets(-cash) = 215000
- Decrease in current liabilities = 34000
-------------------------------------------------------Cash Flow from Operating Activities(before paying tax) = (110500)
- Tax Paid = 74000
-------------------------------------------------------Net Cash Flow from Operating Activities = (184500)
B. Cash Flow from Investment Activities
Sale of Fixed Assets = 12000
+

Sale of Investment = 8500

- Purchase of investment = 60000 - (50000-8000) = 18000

--------------------------------------------------------

Cash Flow from Investment Activities = 2500

C. Cash Flow from Financing Activities
+

Increase of Term Loan = 270000

- Dividend = 40000
-------------------------------------------------------Cash Flow from Financing Activities = 230000
SUMMARY OF CASH FLOW STATEMENT:
Opening Balance = 149000
+ Operating activities = (184500)
+ Investing activities = 2500
+ Financing activities = 230000
----------------------------------Closing Balance = 197000

Q.2
In Rs ,000/A. Cash Flow from Operating Activities
Net profit = 100-60 = 40
+

Depreciation of machinery = 25%*500=125

Provision for tax = 100-(70-50)=80

Transfer to General reserves = 50

Proposed Dividend = 200

- Profit from sale of machine = 15 = 35-20

[NOTE: To calculate loss/profit from sale of machine, always WDV(Written
Down Value) is considered]
------------------------------------------------------

Cash flow from Operating Activities(before changes in working capital) = 480

- No change in current assets = 0
- Decrease in current liabilities = 120
-------------------------------------------------------Cash Flow from Operating activities(before paying tax) = 360
- Tax Paid = 50
-------------------------------------------------------Net Cash Flow from Operating activities = 310
B. Cash Flow from Investment Activities
Sale of Machinery = 35
- Purchase of Machinery = 700-(500-125-20) = 345
- Purchase of Building = 200
- Purchase of Investment = 100
-------------------------------------------------------Net Cash Flow from Investment activities = (610)
C. Cash Flow from Financing Activities
Dividend = (100)
+

Issue of shares = 200

Issue of Debentures = 200

-------------------------------------------------------Net Cash Flow from Financing Activities = 300

SUMMARY OF CASH FLOW STATEMENT:
Opening Balance = 200
+

Cash Flow from Operating Activities = 310

Cash Flow from Investment Activities = (610)

Cash Flow from Financing Activities = 300

-------------------------------------------------------Closing Balance = 200