cash flow statement

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Live Project CASH FLOW STATEMENT ASHER JOSEPH

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Page 1: Cash Flow Statement

Live Project

CASH FLOW STATEMENT

ASHER JOSEPH

Page 2: Cash Flow Statement

Introduction to the Topic

The topic given to me was to visit a

manufacturing firm and collect its profit

and loss account and balance sheet for

the two years and on that basis prepare a

cash flow statement.

Page 3: Cash Flow Statement

Profit and Loss Account

The Profit and loss account is generally prepared to

determine the profit and loss made by an organization

during a particular period. While preparing this account

the following points must be kept in mind :

All expenses are debited to the Profit and loss account

All incomes are credited to the Profit and loss account

In addition certain adjustments are also treated given in

the trial balance

Page 4: Cash Flow Statement

A Balance Sheet is a statement of assets and

liabilities of a business organization at any particular

date. At the end of each accounting period, every

business organization prepares a Balance Sheet to

have a clear understanding of its assets and liabilities

which indicate the financial position of the concern

Balance Sheet

Page 5: Cash Flow Statement

Cash Flow Statement (AS-3 revised)

Cash flow statement comes under the accounting standard 3.

The following concepts are important to understand before

preparing the cash flow statement:

Cash : The general view of the term cash or cash equivalents

are short term highly liquid investments that are readily

convertible into cash with no or negligible loss such as

Government Bonds

The second concept is that of the working capital , which is

mathematically illustrated as current assets – current liabilities

Page 6: Cash Flow Statement

Uses OF Cash Flow Statement

Ability to generate cash flows : The cash flow statement makes it possible to

predict the amounts, timing and uncertainty of future cash flows on the basis of

what has happened in the past.

Ability to pay dividends and meet commitments : A cash flow statement

indicates the sources and uses of cash under suitable headings such as

operating, investing and financing activities respectively.

Reasons for the difference between proit and loss and net cash flow from

operating activities : The figure of net profit is important since it provides

information about the success and failure of a business fro time to time .

Investing and financing transactions during the period : By analysing the

company’s investing activities the users of financial statements can judge why

assets and liabilities increased or decreased during the period covered.

Page 7: Cash Flow Statement

Components of Cash Flow

CASH FLOW STATEMENT

OPERATING ACTIVITIES

INVESTING ACTIVITIES

FINANCING ACTIVITIES

Page 8: Cash Flow Statement

Objective of study Primary Purpose : A primary purpose and objective of cash

flow statement is to provide information about the cash

receipts and cash payments of a business entity for the

accounting period covered by the income statement.

Secondary purpose : The secondary purpose or objective

of the Cash Flow statement is to provide information about

the business entity’s operating, investing and financing

activities during the accounting period.

Page 9: Cash Flow Statement

Methodology

Data collection

The company used for this study is Dabur Nepal Private Ltd, and

most of the information is based on the data obtained from the

company’s annual report.

Also in addition various books and articles have been referred for

this study in order to correctly judge the financial position of the

enterprise and also to prepare the Cash Flow statement.

The Profit and loss account and Balance sheet as provided in this

report is an extract from the Annual Report of Dabur Nepal Private

Ltd. Also mentioned in the Report are the names of the chief

operating officers in the management

Page 10: Cash Flow Statement

Introduction to Dabur

Dedicated to Nature

The guiding force behind Dabur's growth and success has

been the wealth of nature and its limitless capacity to support

life,

Dabur Nepal Private Limited was set up as an independent

Group company in 1992. This new company, set amidst the

verdant greens and towering mountains of the Himalayan

kingdom of Nepal, has established a unique bond of

technology and preservation.

Page 11: Cash Flow Statement

CASH FLOW STATEMENT (Indirect method)

 PARTICULARS  In lacs  Date  In lacs  Date

A Cash flow from operating activities   31-Mar-04   31-Mar-05

  Net profit as per P&L account   1841.53   1381.21

  Add:        

  Depreciation  1065.95  1014.3

1  

  Amortization of Deferred expense  16.42   15.1  

  Interest 809.47   553.85  

  Fixed assets written off 91.77   91.77  

  Loss on sale of assets 10.74      

  Loss on sale of Bonds 120.48      

      2114.83   1675.03

Page 12: Cash Flow Statement

Less:        

Profit on sale of fixed assets     12.75  

Interest received 11.28   8.09  

Rent received 1.82 13.1 2.93 23.77

Operating profit before working capital changes   3943.26   3032.47

Working capital changes        

Increase/Decrease in inventories 618.69   1779.19  

Increase /Decrease in debtors 398.56   57.83  

Increase/Decrease in Loans and advances 178.58   136.11  

Increase/Decrease in Deposits and receivable 723.17   1239.28  

Decrease /Increase in Liabilities 2425.27   892.56  

Decrease /Increase in Provisions 78.02   145.19  

Increase In working capital   4056.13   419.56

Page 13: Cash Flow Statement

Cash generated from operation 8008.39 3452.03

Interest paid -1002.48 -516.87

advance tax paid -306.74 -417.96

Income tax adjusted for previous years -9.52 -41.92

Cash Generated from Operating activities    6689.65   2475.28

Cash Flow from Investing activities        

Purchase of fixed assets   - 1032.10   -2,329.58

Deferred Revenue expenses   -75.56    

Purchase of Investments       19.3

Sale of fixed assets   460.98   49.23

Sale of investments   419.78    

Rent received   1.82   2.93

Cash Generated from Investing activities   -225.28   -2,296.72

Page 14: Cash Flow Statement

C Cash Flow from Financing activities        

  Payment of working capital loans   -1373.42   -2.06

  Repayment of term loans to banks   -607.88    

  Repayment of unsecured loans to banks   -4000    

  Deferred Financing from supplier   -49.36   -8.26

  Payment of dividend   -364.23   -242.64

  Tax on dividend   -19.01   -12.77

  Interest received   11.28   8.09

  Cash flow from Financing activities   -6402.62   -257.64

  Net increase in cash flow   61.75   -79.08

  Opening cash and bank balance   30.03   91.78

  Closing cash and bank balance   91.78   12.7

Page 15: Cash Flow Statement

Research Findings

In this case of Dabur Nepal private ltd. The Net profit for the previous

year 2004 was 1841.53 lacs as compared to the current year 2005

1381.21lacs , so there has been a decline in the net profits of the

company to the extend of 460.32 lacs .

Also the depreciation amount has been provided on the assets @ 5%

approx. There has been a loss of assets and on bonds in the

previous year amounting to 131.22 lacs. In the area of working

capital there is a considerable decrease in the amount if compared to

the previous year.

Page 16: Cash Flow Statement

The turnover of the company has increased by 4.69% over the

previous year. The Net Profit after tax has reduced by 2.28% over

the previous year due to lower contribution margin.

During the year the company has invested Rs 24.65 crore on

account of fixed assets. Out of which, major amount is spent

towards installing a new packing machine in Juice Plant in Flex

Pack and increasing cold store capacity. The company has

disposed off it’s fixed assets amounting Rs 4.51 crore during the

year.

Page 17: Cash Flow Statement

The reason for the low profits this year has been mainly due to

purchase of fixed assets as the company is taking drastic steps

towards modernizing and diversification necessary equipment is

needed. There are been an allocation of 1297.48 lacs for this

purpose.

Page 18: Cash Flow Statement

Conclusion

To conclude it can be said that the financial

position of the company is sound though the net

profits have decreased but the shareholders

have not been affected strongly by this , the

company has taken positive steps towards

modernization and expansion

Page 19: Cash Flow Statement

Bibliography

Dabur Nepal Private Ltd

Corporate Accounting J.R.Monga