PRACTICE QUESTION – STATEMENT OF CASHFLOW

Bull Ltd
Statement of Cash Flow for the year ended 31 March 2021

RM’000 RM’000
Cash flows from operating activities:
Profit before tax – W1 205 2
Add interest charged 15
Less interest received (2)
Profit before tax and interest 218
Depreciation - W2 90 1
Loss on disposal of Tangible NCA – W3 8 1
Profit on Sale of Investment – W4 (10) 88 1
Operating Cash flows before changes in 306
Working Capital
Increase in inventory 0
Increase in debtors 0 2
Increase in creditors 0 0
Cash Generated from operations: 306 1

Interest paid (15) 1

Corporation tax paid (80) (95) 1
Net cash inflow from Operating activities: 211

Cash flows from investing activities: 1

Interest received 2 1
Payments to acquire Tangible NCA (215) 2
Payments to acquire Intangible NCA (50) 1
Sale proceeds of investments 35 1
Proceeds of sale of non-current assets 42 1
Net cash outflow from investing activities (186)
25
Cash flows from financing activities: 1
Issue of shares 60 1
Increase in Long Term Loan 40 1
Dividends Paid (50) 1
Net Cash inflow from Financing Activities 50

Net cash inflow 75 1

Analysis of changes in cash and cash £

equivalents:
Balance at 31 March 2020 (218)
Net cash inflow in year 75
Balance at 31 March 2021 (143) 1

marks 23
(W1) Profit after Tax (note 1) 125
Add back Tax charged (deb PorL/cred current liabs) 80
Profit before tax 205

(W2) Accumulated depreciation at 31 March 2006 290

Depreciation relating to disposal (40)
Charge for year - (Balancing Figure) 90
Closing balance 340

(W3) Proceeds of sale of Tangible NCA 42

Net book value 50
Loss on sale of Tangible NCA 8

(W4) Proceeds of sale of Investment 35

Net book value 25
Profit on sale of Investment 10

(W5) Opening balance Tangible Non-Current Assets 615

Disposal (90)
Revaluation 50
Purchase of non-current asset - (Balancing Figure) 215
Closing balance 790

b.) The answer could include the following points.

(Each point 1 Mark to a maximum of 2)

 The Statement of Cash Flow contains new information, which is not otherwise
readily available from the CIS and SFP.

Examples of the new information would include the

 net cash inflow from operations
 cash flows resulting from capital expenditure and disposals,
 cash flows resulting from investing activities
 cash flow effect of financing activities.

 The supplementary note containing the reconciliation of operating profit and net
cash flows from operating activities shows the extent to which reported profit is
matched by corresponding cash flows, and hence shows the cash quality of the
profit.

The supplementary note containing the reconciliation of net cash flow to net debt,
reveals amounts realised or paid in respect of long-term financing. The level of
detail in this note would not normally be readily available from the income
statement or the balance sheet.