FORMAT FOR PREPARING CASH FLOW STATEMENT - start with PBT

Assets Liabilities and Stockholders’ Equity

(A) CASH FLOW FROM OPERATING ACTIVITIES (Data: Income statement, CA andSign
CL)
2010 2011 2010 2011
Cash ₹ 2,00,000.00 ₹ 1,40,000.00 Current Liabilities ₹ 1,50,000.00 ₹ 1,37,000.00 Profit before tax/Losses +/- 49000
Other current assets ₹ 1,50,000.00 ₹ 1,85,000.00 Bonds payable (face value) ₹ 60,000.00 ₹ 32,000.00
Land ₹ 3,00,000.00 ₹ 3,00,000.00 Dividends payable ₹ 5,000.00 ₹ 8,000.00 Adjustments before working capital changes
Stock ₹ 25,000.00 (1) Add back all non-cash expenses, Depreciation and Amortisation + 7000
Buildings and Equipment ₹ 6,30,000.00 ₹ 7,10,000.00 Common Stock ₹ 9,00,000.00 ₹ 10,00,000.00 (2) Subtract/add profit/loss on sale of equipment +/- -2000
Accumulated Depreciation- Retained Earnings ₹ 45,000.00 ₹ 64,000.00 (2) Subtract/add profit/loss on sale of Bonds +/- 5000
Buildings and Equipment ₹ -1,60,000.00 ₹ -1,56,000.00 (3) Reclassify interest/dividend income under investing activities -
Patents ₹ 40,000.00 ₹ 37,000.00 ________ ________ (4) Reclassify interest paid under financing activities +
Total ₹ 11,60,000.00 ₹ 12,41,000.00 Total ₹ 11,60,000.00 ₹ 12,41,000.00 Note: US GAAP treats interest paid as operating activities and hence, step 4 is not relevant under US GAAP.

Working Capital Changes

(1) Increase in current assets, Receivable - -35000
(2) Decrease in current assets +
(3) Increase in current liabilities, Payable +
(4) Decrease in current liabilities - -13000

Taxes Paid, deferred income tax -

Net cash generated from/used in operating activities (A) +/- 11000

(B) CASH FLOW FROM INVESTING ACTIVITIES (Data: Interest/Divi income, non-current assets)

(1) Reclassification of interest/dividend income +

(2) Purchase of fixed assets -
(3) Proceeds from sale of fixed assets + 14000
(4) Purchase of investments - -25000
(5) Proceeds from sale of investments +

Net cash generated from/used in investing activities (B) +/- -11000

(C) CASH FLOW FROM FINANCING ACTIVITIES (Data: Interest Paid, Dividend paid, non-current liabilities)

(1) Interest Paid -See note above

(2) Dividend paid - -27000
(3) Issuance of share capital with or without premium +
(4) Buy back of shares with or without premium (shown as treasury stock
- in the balance sheet)
(5) Proceeds from borrowings (including short term borrowings) +
(6) Repayment of borrowings (including short term borrowings) - -33000

Notes
(a) Issue of bonus shares does not affect the cash flow as it involves transfer
from Reserves & Surplus account to Capital account.
(b) Changes in Retained earnings (part of Reserves & Surplus) due to net income
or net losses during the accounting period are not considered for cash flow statement as computation
of operating cash flows starts from Profit before tax/Losses which include such changes.

Net cash generated from/used in financing activities (C) +/- -60000

Net changes in cash and cash equivalents during the year (A+B+C) -60000
Opening Balance of cash and cash equivalents ₹ 2,00,000.00
Closing balance of cash and cash equivalents ₹ 1,40,000.00