Cash flow statement and report - Case Study Example

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Cash flow statement and report

No figure of tax is mentioned in the profit and loss statement of the company so it is assumed that the net income is profit before tax and the tax paid is incorporated in the tax payable figure. From the net income non cash adjustments have been made such depreciation and loss recorded on sale of fixed asset. Since these items were charged to the profit and loss account, these are added back to the net income. In addition the net increase decrease is calculated in the current assets and liabilities. If the asset has decreased from the previous year it would be taken as cash inflow. This can be understood by considering accounts receivable for example. If the account receivable has decreased this means that the debtor has paid cash (the company would have made the entry Cash: Debit and Accounts receivable: credit) and thus it is taken as cash inflow. ...Show more

Summary

1. Cash Flow Statement Amount in $ Net Income 50,000 Adjustment for non-cash items Depreciation 60,000 Loss on sale of asset 10,000 (Increase) / Decrease in operating assets Accounts Receivable (41,000) Prepaid Insurance (9,000) (Increase) / Decrease in operating liabilities Accounts Payable 5,000 Salaries Payable 5,000 Income taxed Payable (10,000) Bank loan payable (75,000) Net cash flow from operating activities (5,000) Cash flow from investing activities Property, Plant and equipment (125,000) Sale proceed from sale of land 90,000 Sale proceed from sale of equipment 20,000 (15,000) Cash flow from financing activities Dividend paid (5,000) (5,000) (Decrease) / Increase in cash and cash equ…
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