ACMA Unit 5

Cash Flow problems

Problem 1
An analyst gathered the following information from a company’s 2018 financial statements
(in million $)
Particulars 31st December 2017 31st December 2018
Net Sales 245.8 254.6
Cost of Goods sold 168.3 175.9
Accounts Receivable 73.2 68.3
Inventory 39.0 47.8
Accounts payable 20.3 22.9
Based only on the information above, the company’s 2018 statement of cash flows prepared using the direct
method, calculate the cash received from customers and cash paid to suppliers.
Problem 2
An analyst gathered the following information from a company’s 2018 financial statements
(in million $)
Particulars 31st March 2017 31st March 2018
Retained Earnings 120 145
Accounts Receivable 38 43
Inventory 45 48
Accounts Payable 36 29
The company declared and paid cash dividends of $ 10 million in 2018 and recorded depreciation expense in
the amount of $ 25 million for 2018. Calculate the company’s 2018 cash flow from operations.
Problem 3
An international metals company reported a loss on the sale of equipment of $ 2 million. In addition, the
company’s income statement shows depreciation expense of $ 8 million and the cash flow statement shows
capital expenditure of $ 10 million, all of which was for the purchase of new equipment. Using the following
information from the comparative balance sheets, how much cash did the company receive from the
equipment sale?
(in million $)

Balance sheet item 31/03/2015 31/03/2016 Change

Equipment 100 105 5

Accumulated depreciation – 40 46 6
equipment
Problem 4
JP Stores reported net income of $ 25 million, which equals the company’s comprehensive income. The
company has no outstanding debt. Using the following information from the comparative balance sheet, what
should the company report in the financing section of the statement of cash flows?
(in million $)

Balance sheet item 31/03/2015 31/03/2016 Change

Common Stock 100 102 2

Additional paid-in capital common 100 140 40

stock

Retained Earnings 100 115 15

Total Stock holders’ Equity 300 357 57

Problem 5
Based on the following information for PK Inc., what are the total net adjustments that the company would
make to net income in order to derive operating cash flow?
(in million $)

Balance sheet item 31/03/2017 31/03/2018 Change

Accounts Receivable 25 22 (3)

Inventory 10 14 4
Accounts payable 8 13 5

Income Statement item

Net income 20

Depreciation 2

Problem 6
The financial position of ABC Ltd. on 1 January 2009 and 31 December 2009 was as follows:

Assets 1-1-2009 31-12-2009

Rs. Rs.
Cash 8,000 7,200
Debtors 70,000 76,800
Stock 50,000 44,000
Land 40,000 60,000
Building 1,00,000 1,10,000
 Machinery: 2,14,000 2,44,000
Provision for Depreciation (54,000) (72,000)
4,28,000 4,70,000
Liabilities Rs. Rs.
Current Liabilities 72,000 82,000
Loan from associate company – 40,000
Loan from Bank 60,000 50,000
Capital and Reserves 2,96,000 2,98,000
4,28,000 4,70,000
During the year Rs. 52,000 were paid as dividends. Prepare a cash flow statement.

Problem 7
From the following balance sheets of X Ltd., make out the statement of cash flows:

Liabilities 2008 2009

Rs. Rs.
Equity Share Capital 3,00,000 4,00,000
8% Preference Share Capital 1,50,000 1,00,000
General Reserve 40,000 70,000
Profit and Loss Account 30,000 48,000
Proposed Dividend 42,000 50,000
Creditors 55,000 83,000
Bills Payable 20,000 16,000
Provision for Taxation 40,000 50,000
6,77,000 8,17,000
Assets Rs. Rs.
Goodwill 1,15,000 90,000
Land & Buildings 2,00,000 1,70,000
Plant 80,000 2,00,000
Debtors 1,60,000 2,00,000
Stock 77,000 1,09,000
Bills Receivable 20,000 30,000
Cash in hand 15,000 10,000
Cash at Bank 10,000 8,000
6,77,000 8,17,000
Additional information:
(a) Depreciation of Rs. 10,000 and Rs. 20,000 have been charged on plant and land & buildings
respectively in 2009.
(b) An interim dividend of Rs. 20,000 has been paid in 2009.
(c) Rs. 35,000 income-tax was paid during the year 2009.