CASH FLOWS STATEMENT - LECTURE EXAMPLE
Income Statements
For the year ended 31 Dec 20X3
20X3
Sales 22,833
Less: COGS 16,518
Gross Profit 6,315
Less: SGA Expenses 4,849
Less: Interest Expenses 459
Profit before tax 1,007
Less: Income Tax Expense 590
Net Income 417
Balance Sheet
For the year ended 31 Dec
20X2 20X3
Assets
Cash 430 475
Account Receivable 3,768 3,936 168
Inventories 2,334 2,966 632
Prepayments 116 270 154
Total Current Assets 6,648 7,647
Property, Plant and Equipment (net) 3,806 4,598
Intangible Assets 193 559
Total Assets 10,647 12,804
Liabilities & Shareholders' Equity
Account Payable 1,578 809 -769
Note Payables to bank 11 231 220
Wages & other expenses payable 1,076 777 -299
Total current liabilities 2,665 1,817
Long term debt 2,353 4,692 2,339
Deferred Income Taxes 126 89 -37
Total liabilities 5,144 6,598
Common Stocks 83 85 2
Preferred Stocks 0 289 289
Paid-in Capital - Preferred Stocks 4,385 4,392 7
Retained Earnings 1,035 1,440
Total Equity 5,503 6,206
Total Liabilities & Equity 10,647 12,804
Additional Information:
· Dividends on Preferred Stock: 12 12
· Depreciation Expense: 641
· Amortization Expense: 25
· No sale of PPE during the year
· Dividend paid is classified as Financing cash flows
· Interest received and paid, dividend received (if any) are classified as Operating cash flows
Statement of Cash Flows 20X3
Cash flows from Operating Activities
Net Income
Adjustment for non-cash items
Add: depreciation expense
Add: amortization expense
Adjustment for non-operating items
Loss (gain) from sales of non-current assets
Adjustment for deferred tax
(Increase) Decrease in Deferred Tax Asset
Increase (Decrease) in Deferred Tax Liability
Adjustments for working capital items
(Increase) Decrease in Account Receivable
(Increase) Decrease in Inventories
(Increase) Decrease in Prepayments
Increase (Decrease) in Account Payable
Increase (Decrease) in Wages & Other Expenses payable
Net cash flows from Operating Activities (1) -
Cash flows from Investing Activities
Acquisition of fixed assets
Sales of PPE
Net acquisition of intangible assets
(Purchase)/Sale of investments
Net cash flows from Investing Activities (2) -
Cash flows from Financing Activities
Increase (Decrease) in short term borrowing
Increase (Decrease) in long-term borrowing
Issue of common stocks
Issue of preferred stocks
Repurchase of shares
Dividend Paid
Other
Net cash flows from Financing Activities (3) 0
Net change in cash (4) = (1)+(2)+(3) 0
Cash - opening balance (5)
Cash - ending balance (4)+(5)
ting cash flows
Step 1:
Provide the format of SCF
Step 2:
Fill in beginning and ending cash balances (from Balance Sheet), compu
Step 3:
Fill in net income (from Income Ststement)
Step 4:
Calculate the changes in working capital (from BS: current assets except
Step 5:
Calculate the changes in equity items
Changes in Common stock/Preferred stock/APIC. Increase indicates cash
Calculate the changes in treasury stock. Increase indicates cash outflow
Step 7:
6: Put
Calculate the changes
in dividends in interest-bearing liabilities (both short term and
paid (outflow).
Dividends paid = Beginning RE + Net income – Ending RE
Step 8: Put in depreciation/amortisation exp. Depreciation/amortisation can be g
Step 9: Calculate the non-current assets acquired/sold (investing)
Fixed assets (net PPE): Ending FA = Beginning FA + Purchase – Sale – D
FA purchase = Ending FA – Beginning FA + Sale + Depreciation exp (if n
End PPE (cost) = Beg PPE -cost + Purchase at cost – Cost of disposed PP
End Accumulated dpereciation = Beg Accumulated depreciation + Depr
Intangible assets: Ending intangible = Beginning intangible + pu
Intangible purchase = Ending intangible – Beginning intangible + Sale +
CFO Step 10: Fill in non-cash items (depreciation, amortization, deferred tax, gain/los
Step 11: Calculate CFO, CFI, CFF and reconcile CFO+CFI+CFF with net change in
CFI
CFF
0
om Balance Sheet), compute net change in cash = ending cash - beginning cash
m BS: current assets except cash, non-interest bearing current liabilities
PIC. Increase indicates cash inflow and decrease indicates cash outflow under financing activities
ease indicates cash outflow as company buybacks more share and decrease indicates cash inflows as
ilities (both short term and long term). Increase/decrease indicates cash inflow/outflow
ation/amortisation can be given or calculated
d (investing)
ng FA + Purchase – Sale – Depreciation exp
Sale + Depreciation exp (if net PPE is provided)
at cost – Cost of disposed PPE
ulated depreciation + Depreciation exp
= Beginning intangible + purchase – sale – Amortisation
eginning intangible + Sale + Amortisation
ation, deferred tax, gain/loss, employee benefits)
CFI+CFF with net change in cash
nancing activities
dicates cash inflows as the company reissues treasury stock