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Cash flow statement

analysis
AFTERSCHO☺OL
– DEVELOPING CHANGE MAKERS
CENTRE FOR SOCIAL ENTREPRENEURSHIP
PGPSE PROGRAMME –
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02/03/09 AFTERSCHO☺OL's
AFTERSCHO☺OL's MATERIAL
MATERIAL 1
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Cash flow statement
analysis
Dr. T.K. Jain.
AFTERSCHO☺OL
Centre for social entrepreneurship
Bikaner M: 9414430763
tkjainbkn@yahoo.co.in
www.afterschool.tk, www.afterschoool.tk
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02/03/09 AFTERSCHO☺OL's
AFTERSCHO☺OL's MATERIAL
MATERIAL 2
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What is cash?
• Cash or bank balance.

02/03/09 AFTERSCHO☺OL's MATERIAL 3


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Methods of cash flow analysis?
• 1. direct method
• 2. indirect method

02/03/09 AFTERSCHO☺OL's MATERIAL 4


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Direct method
• Here you have to take each item
individually and prepare cash flow
statement to show the net impact and
identify the flow of cash.

02/03/09 AFTERSCHO☺OL's MATERIAL 5


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Indirect method….
• Take profit from P & L account and adjust
it for non-cash items.

02/03/09 AFTERSCHO☺OL's MATERIAL 6


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Three componenents of cash flow
statement…
1. Cash from operations
2. Cash from financing
3. Cash from investing

02/03/09 AFTERSCHO☺OL's MATERIAL 7


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Cash from operations…
• Indirect method :
• Profit
• Add + all non cash expenses / provisions
etc.
• Less = all non cash income etc.

02/03/09 AFTERSCHO☺OL's MATERIAL 8


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Cash from financing
• If equity, debt, etc. increased, that means,
there is more cash from financing

• If equity, debt etc. decreased, that means


there is application of cash.

02/03/09 AFTERSCHO☺OL's MATERIAL 9


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Cash from investing….

• If fixed assets and investments increased,


it means, there is application of cash

• If fixed assets & investments reduced, it


means there is source cash and so cash
from investing should increase.

02/03/09 AFTERSCHO☺OL's MATERIAL 10


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What to add to profit (indirect
method)?
• Depreciation
• Loss on sale of fixed assets
• Amortisation of intangible assets
• Impairment
• Bad debt
• Interest (it will go to cash from investing or cash
fro financing acticity)
• (all other non – cash expenses/ provisions).

02/03/09 AFTERSCHO☺OL's MATERIAL 11


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What to deduct from profit (indirect
method)
• Profit on sale of fixed assets

02/03/09 AFTERSCHO☺OL's MATERIAL 12


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Example:
• Profit : 5000
• (after deducting salary 1000, purchase
15000, depreciation 1000, goodwill written
off 1000, rent 1000, wages 5000)
• Solution:
• Cash from operations (indirect method):
• 5000 + 1000 (dep) + 1000 (goodwill)
• = 7000 answer.
02/03/09 AFTERSCHO☺OL's MATERIAL 13
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About AFTERSCHO☺OL
• PGPSE - World’s most comprehensive
programme on social entrepreneurship –
after class 12th
• Flexible – fast changing to meet the
requirements
• Admission open throughout the year
• Complete support from beginning to the
end – from idea generation to making the
project viable.
02/03/09 AFTERSCHO☺OL's MATERIAL 14
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Branches of AFTERSCHO☺OL
• PGPSE programme is open all over the
world as free online programme.
• Those who complete PSPSE have the
freedom to start branches of
AFTERSCHO☺OL
• A few branches have already started -
one such branch is at KOTA (Rajasthan).

02/03/09 AFTERSCHO☺OL's MATERIAL 15


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Workshop on social
entrepreneurship
• We conduct workshop on social
entrepreneurship – all over India and out
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• These workshops are great moments of
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02/03/09 AFTERSCHO☺OL's MATERIAL 16


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FREE ONLINE PROGRAMME
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02/03/09 AFTERSCHO☺OL's MATERIAL 17


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02/03/09 AFTERSCHO☺OL's MATERIAL 18


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Pursue professional courses along
with PGPSE
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02/03/09 AFTERSCHO☺OL's MATERIAL 19


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