I am writing this report to comment on the financial performance and

position of the company for the year ended 31 December 2012 based on the
statement of cash flow that I prepared. Basically the cash flows of the company
involve in three types of activities which are operating activities, investing
activities and financing activities.
Cash flow from operating activities
As shown in the statement of cash flows, the profit before tax of the
company is RM 15,000,000 which comes from the sales of the company.
However, we still cannot justify the financial performance and position of the
company based on just the profit before tax of the company. Other aspects will
be considered later in this report in order to make an evaluation of financial
performance and position of the company more accurately. After making some
adjustments due to depreciation of assets (add RM 4,658,000), gain on disposal
of non-current assets (minus RM 720,000) and interest paid (add RM 207,000) we
get an amount of RM19, 145,000 which is the operating cash flow before working
capital changes.
There is a decrease in inventory which is RM 6,075,000 which means that
some of the inventories were sold during the year. The increase in accounts
receivable (RM 1,863,000) shows that our company is having credits of sales
which the debtors havent paid us. While the increase in accounts payable (RM
3,178,000) shows that our company havent paid the money to the creditors and
we are having the debt with the creditors. We are also having an increase in
interest payable which is amounted to RM 20,000. After computing the above
amount with the operating cash flow before working capital changes, we have
the cash generated from operating activities of RM 265,550,000. After
subtracting the tax paid and the interest paid which are RM 4,900,000 and RM
207,000 we get a net cash inflow of RM 22,258,000. Hence it is clear that our
company has done a good job in maintaining the inventory and the debtors.
Cash flow from investing activities
During this year, we have purchased tangible asset which leads to an
outflow of cash RM 24,340,000. And, we get cash of RM 2,694,000 from sale of
tangible fixed assets. The cash outflow from the investing activities during the
year has a total of RM 21,646,000.
Cash flow from financing activities
Our company had paid the dividend to the shareholders which had a grand
total of RM1, 486,000. Besides that, we are having a long-term loan of RM
2,300,000. In this year our company had issued 1,000,000 ordinary shares of RM
1 each with the share premium of RM 869,000. Therefor the proceeds from the
issuance of shares are RM 1,869,000. By subtracting it with dividend paid and
long-term loan, the net cash outflow from financing activities is RM 1,917,000
Summary

According to the statement of cash flow provided, there is a net decrease

in cash and cash equivalent of RM 1,300,000. The cash and cash equivalent at
the beginning of the year is RM 634,000 and hence the Cash and cash equivalent
at the end of the year is decreased by RM 671,000.
Most of the cash was spent on investing activities which amounted to RM
21,646,000. The reason might be that our company are trying to expand our
business currently. In addition, there is also a net cash outflow from financing
activities of RM 1,917,000. The reason behind might be due to the inability of our
company to handle the debts effectively and efficiently.
In conclusion, our company is a mature enterprise which is trying to
expand. However, we have a decrease in cash and cash equivalent at the end of
the year. In order to turn it to a positive figure, some steps have to be carried
out. For instance, we should plan well before using the cash so that we will not
have a budget deficit. Moreover, it is advisable to urge the debtors to pay off
their debts as soon as possible in order to meet the needs of the enterprise
expansion.