1 management accounting - dr. varadraj bapat, iit mumbai cash flow statement proforma and problems
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1Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Cash Flow Cash Flow StatementStatement
Proforma and ProblemsProforma and Problems
2Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
IntroductionIntroductionCash Flow formatCash Flow format
Cash Flow ProblemsCash Flow Problems
3Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Cash Generated Cash Generated from Operationsfrom Operations
Retained EarningRetained Earning XXXX
DividendDividend XXXX
Net Profit After TaxNet Profit After Tax XXXX
Add: Provision for TaxAdd: Provision for Tax XXXX
Net Profit Before TaxNet Profit Before Tax XXXX
Add: Non-cash ExpensesAdd: Non-cash Expenses
DepreciationDepreciation XXXX
Amortisation (Goodwill w/o)Amortisation (Goodwill w/o) XXXX
4Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Adjust: Non-operating itemsAdjust: Non-operating items XXXX
Loss on sale of Asset/InvestmentLoss on sale of Asset/Investment XXXX
Interest expensesInterest expenses XXXX
Interest/ Dividend IncomeInterest/ Dividend Income (XX)(XX)
Profit on sale of Asset/ Profit on sale of Asset/ InvestmentInvestment
(XX)(XX)
Funds from OperationsFunds from Operations XXXX
5Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Adjust: Working Capital ItemsAdjust: Working Capital Items XXXX
Decrease in Current AssetDecrease in Current Asset XXXX
Increase in Current LiabilitiesIncrease in Current Liabilities XXXX
Increase in Current AssetIncrease in Current Asset (XX)(XX)
Decrease in Current LiabilitiesDecrease in Current Liabilities (XX)(XX)
Cash generated from operationCash generated from operation XXXX
Income Tax PaidIncome Tax Paid (XX)(XX)
Cash flow from operating activitiesCash flow from operating activities XXXX
6Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Cash Flow from Investing ActivitiesCash Flow from Investing Activities
Purchase of Assets / InvestmentPurchase of Assets / Investment (XX)(XX)
Sale of Assets / InvestmentSale of Assets / Investment XXXX
Interest / Dividend receivedInterest / Dividend received XXXX
Investment in joint ventureInvestment in joint venture (XX)(XX)
Cash flows from investing activitiesCash flows from investing activities XXXX
7Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Cash Flow from Financing ActivitiesCash Flow from Financing Activities
Issue of shares/ debentures for cashIssue of shares/ debentures for cash XXXX
Redemption of Preference shares/ Redemption of Preference shares/ debenturesdebentures
(XX)(XX)
Interest / Dividend paidInterest / Dividend paid (XX)(XX)
Proceeds from borrowingsProceeds from borrowings XXXX
Repayment of loanRepayment of loan (XX)(XX)
Cash flows from financing activitiesCash flows from financing activities XXXX
8Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Cash Flow Cash Flow StatementStatement
1. Cash Flow from Operating Activities1. Cash Flow from Operating Activities XXXX
2. Cash Flow from Investing Activities2. Cash Flow from Investing Activities XXXX
3. Cash Flow from Financing Activities3. Cash Flow from Financing Activities XXXX
Net Increase / decrease in cashNet Increase / decrease in cash (1+2+3)(1+2+3)
XXXX
Cash & Cash Equivalents at the beginningCash & Cash Equivalents at the beginning XXXX
Cash & Cash Equivalents at the endCash & Cash Equivalents at the end XXXX
9Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Cash & Cash Cash & Cash EquivalentsEquivalents
at at BeginningBeginning
at at
EndEnd
CashCash XXXX XXXX
BankBank XXXX XXXX
Short Term InvestmentShort Term Investment XXXX XXXX
TotalTotal XXXX XXXX
10Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Exercise 1.Exercise 1. Prepare cash flow statement from Prepare cash flow statement from
the following details of the the following details of the Narendra Ltd.Narendra Ltd.
Profit and Loss A/c for the year Profit and Loss A/c for the year ending 31 March 2010 is as followsending 31 March 2010 is as follows
SalesSales 200000200000
InterestInterest 1500015000
11Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Total IncomeTotal Income 215000215000
PurchasePurchase 7000070000
WagesWages 2800028000
InterestInterest 1400014000
DepreciationDepreciation 90009000
Office ExpOffice Exp 3000030000
Goodwill written offGoodwill written off 1100011000
TaxTax 3700037000
DividendDividend 30003000
Net profitNet profit 1300013000
12Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
20092009 20102010
LiabilitiesLiabilities
Share CapitalShare Capital 160000160000 190000190000
General ReserveGeneral Reserve 5000050000 5000050000
Profit and Loss A/cProfit and Loss A/c 90009000 2200022000
DebenturesDebentures 8000080000 5100051000
CreditorsCreditors 2000020000 4000040000
Proposed DividendProposed Dividend 20002000 30003000
321000321000 356000356000
Balance Sheet of the Narendra Ltd
13Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
20092009 20102010
AssetsAssets
LandLand 7500075000 7500075000
Fixed AssetsFixed Assets 140000140000 131000131000
InvestmentInvestment 5900059000 111000111000
Sundry DebtorsSundry Debtors 1200012000 1700017000
BankBank 50005000 30003000
GoodwillGoodwill 3000030000 1900019000
321000321000 356000356000
14Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Cash Flow statementCash Flow statement
Retained earningsRetained earnings 1300013000
DividendDividend 30003000
Profit as per Profit & loss A/cProfit as per Profit & loss A/c 1600016000
DepreciationDepreciation 90009000
Goodwill written offGoodwill written off 1100011000
Interest ExpensesInterest Expenses 1400014000
Income TaxIncome Tax 3700037000
Interest IncomeInterest Income (15000)(15000)
Funds from operationsFunds from operations 7200072000
15Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Add: Increase in creditorsAdd: Increase in creditors 2000020000
Less: Increase in DebtorsLess: Increase in Debtors (5000)(5000)
Cash generated from operationCash generated from operation 8700087000
Income Tax PaidIncome Tax Paid (37000)(37000)
Net Cash flow from operating Net Cash flow from operating activitiesactivities
5000050000
Cash Flow from Investing ActivitiesCash Flow from Investing Activities
Purchase of InvestmentPurchase of Investment (52000)(52000)
Interest IncomeInterest Income 1500015000
Net cash flows from investing Net cash flows from investing activitiesactivities
(37000)(37000)
16Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Cash Flow from Financing ActivitiesCash Flow from Financing Activities
Issue of sharesIssue of shares 3000030000
DividendDividend (2000)(2000)
Redemption of DebenturesRedemption of Debentures (29000)(29000)
Interest paidInterest paid (14000)(14000)
Net cash flows from Financing Net cash flows from Financing activitiesactivities
(15000)(15000)
Net decrease in cashNet decrease in cash (2000)(2000)
Cash and Cash Equivalents at Cash and Cash Equivalents at the beginningthe beginning
50005000
Cash and Cash Equivalents at Cash and Cash Equivalents at the endthe end
30003000
17Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Cash & Cash Equivalents
at Beginning
at End
BankBank 50005000 30003000
TotalTotal 50005000 30003000
18Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Exercise 2.Exercise 2.
Prepare cash flow statement from the Prepare cash flow statement from the following details of the Keshav Ltd.following details of the Keshav Ltd.
Profit and Loss A/c for the year ending Profit and Loss A/c for the year ending 31 March 2010 is as follows31 March 2010 is as follows
SalesSales 9000090000
Profit on sale of investment (Sale Profit on sale of investment (Sale Value: Rs. 4000)Value: Rs. 4000)
20002000
Closing StockClosing Stock 60006000
19Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Total Income 98000
PurchasePurchase 4000040000
Manufacturing ExpensesManufacturing Expenses 1700017000
WagesWages 14001400
DepreciationDepreciation 50005000
General ExpGeneral Exp 80008000
Discount on issue of debentureDiscount on issue of debenture 30003000
TaxTax 60006000
General ReserveGeneral Reserve 50005000
Net profitNet profit 1260012600
20Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
2009 2010
LiabilitiesLiabilities
Share CapitalShare Capital 5000050000 5000050000
General ReserveGeneral Reserve 1000010000 1500015000
Profit and Loss A/cProfit and Loss A/c 80008000 2060020600
DebenturesDebentures 1000010000 2700027000
CreditorsCreditors 1600016000 1000010000
Provision for TaxProvision for Tax 70007000 1200012000
101000101000 134600134600
Balance Sheet of the Keshav Keshav Ltd
21Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
20092009 20102010
AssetsAssets
Fixed AssetsFixed Assets 4000040000 4000040000
MachineryMachinery 2100021000 5560055600
InvestmentInvestment 50005000 30003000
Sundry DebtorsSundry Debtors 1500015000 1430014300
BankBank 50005000 67006700
GoodwillGoodwill 1500015000 1500015000
101000101000 134600134600
22Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Cash Flow statementCash Flow statement
Retained EarningRetained Earning 1260012600
Transfer General ReserveTransfer General Reserve 50005000
Net Profit as per Profit and Loss Net Profit as per Profit and Loss A/cA/c
1760017600
DepreciationDepreciation 50005000
Discount on issue of DebenturesDiscount on issue of Debentures 30003000
Income TaxIncome Tax 60006000
Profit on sale of investmentProfit on sale of investment (2000)(2000)
23Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Funds From operationFunds From operation 2960029600
Decrease in Sundry DebtorsDecrease in Sundry Debtors 700700
Increase in Bills PayableIncrease in Bills Payable 50005000
Increase in Sundry CreditorsIncrease in Sundry Creditors (6000)(6000)
Cash generated from operationCash generated from operation 2930029300
Income Tax PaidIncome Tax Paid (6000)(6000)
Net Cash flow from operating Net Cash flow from operating activitiesactivities
2330023300
Cash Flow from Investing ActivitiesCash Flow from Investing Activities
Sale of InvestmentSale of Investment 40004000
24Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Purchases of MachineryPurchases of Machinery (39600)(39600)
Net cash flows from investing Net cash flows from investing activitiesactivities
(35600(35600))
Cash Flow from Financing ActivitiesCash Flow from Financing Activities
Issue of DebenturesIssue of Debentures 1400014000
Net increase in cashNet increase in cash 17001700
Cash & Cash Equivalents at the Cash & Cash Equivalents at the beginningbeginning
50005000
Cash & Cash Equivalents at the Cash & Cash Equivalents at the endend
67006700
25Management Accounting - Dr. Varadraj Bapat, IIT Mumbai
Cash & Cash Equivalents
at Beginning
at End
BankBank 50005000 67006700
TotalTotal 50005000 67006700
Balance B/dBalance B/d 2100021000 DepreciationDepreciation 50005000
Cash/Bank A/c Cash/Bank A/c (purchases)(purchases)
3960039600 Balance C/dBalance C/d 5560055600
60600 60600
Machinery A/c