Cash Flow Statement ' 08

INTRODUCTION
In financial accounting, a cash flow statement is a financial statement that shows how
changes in balance sheet accounts and income affect cash and cash equivalents, and breaks
the analysis down to operating, investing, and financing activities. Essentially, the cash flow
statement is concerned with the flow of cash in and cash out of the business. The statement
captures both the current operating results and the accompanying changes in the balance
sheetAs an analytical tool, the statement of cash flows is useful in determining the short-term
viability of a company, particularly its ability to pay bills. International Accounting Standard
7 (IAS 7) is the International Accounting Standard that deals with cash flow statements.
Cash is the important current asset for the operations of the business. Cash is the basic
input needed to keep the business running on a continuous basis; it is also the ultimate output
expected to be realized by selling the service or product manufactured by the firm.
Cash, the most liquid asset, is of vital importance to the daily operations of the
business. While the proportion of corporate assets held in the form of cash is very small, often
between 1and 3 percent. In the view of its importance, it is generally referred as the “life
blood” of business enterprise.
Cash Management is one of the key areas of working capital management. Cash is the
common denominator to which current asset can be reduced because the other liquid assets
are converted into cash.
Business analysts report that poor management is the main reason for business failure. Poor
cash management is probably the most frequent stumbling block for entrepreneurs.
Understanding the basic concepts of cash flow will help you plan for the unforeseen
eventualities that nearly every business faces.
Cash is ready money in the bank or in the business. It is not inventory, it is not accounts
receivable (what you are owed) , and it is not liquid asset these can potentially be converted
to cash ,but can’t be used to pay suppliers, rent ,or employees.
People and groups interested in cash flow statements include:
Accounting personnel, who need to know whether the organization will be able to
cover payroll and other immediate expenses?
Potential lenders or creditors, who want a clear picture of a company's ability to
repay Potential investors, who need to judge whether the company is financially
sound
Potential employees or contractors, who need to know whether the company will be
able to afford compensation
Shareholders of the business.
Purpose:
The cash flow statement was previously known as the flow of funds statement. The cash flow
statement reflects a firm's liquidity.
The balance sheet is a snapshot of a firm's financial resources and obligations at a single point
in time, and the income statement summarizes a firm's financial transactions over an interval
of time. These two financial statements reflect the accrual basis accounting used by firms to
match revenues with the expenses associated with generating those revenues. The cash flow
statement includes only inflows and outflows of cash and cash equivalents; it excludes
transactions that do not directly affect cash receipts and payments. These noncash
transactions include depreciation or write-offs on bad debts or credit losses to name a few.
The cash flow statement is a cash basis report on three types of financial activities: operating
activities, investing activities, and financing activities. Noncash activities are usually reported
in footnotes.
The cash flow statement is intended to provide information on a firm's liquidity and solvency
and its ability to change cash flows in future circumstances
1. provide additional information for evaluating changes in assets, liabilities and equity
2. improve the comparability of different firms' operating performance by eliminating
the effects of different accounting methods
3. indicate the amount, timing and probability of future cash flows
NEED FOR THE STUDY
Many business owners disregard the importance of cash flow statements because
they unwittingly believe that their current financial standing can be construed from other
financial reports and projections. Unfortunately, however, a cash flow statement is
necessary to adequately assess the incoming and outgoing flow of cash and other
resources in a business. Not only will a business owner with a cash flow system be more
aware of his or her financial standing, but it will also help investors to make educated
decisions on future investments. A business with regular and reliable cash flow statements
shows more economic solvency, and is more attractive to investors.
A cash flow statement documents the incoming and outgoing cash in plain terms.
Future sales and sales made for credit (unless they have been paid off) are not included in
the cash flow statement, and most of the data will come from core operations. Payables
and receivables should be expressly defined, as should depreciation of product value and
inventory that has not yet been moved. This will allow a business owner to compare past
periods with the current financial standing and determine whether your receivables have
increased or decreased. This can also help to track your investments next to your
receivables and payables. Are your investments increasing or decreasing in value? And
has your inventory moved at a steady pace? New or expanding businesses can expect to
see a decrease in cash flow, but this doesn’t mean that the business is going under. More
stables businesses should see a steadily increase in cash flow over a period of several
Months or years
There are typically five different sections in a cash flow statement, though large
businesses might have more complex cash flow systems as required
OBJECTIVES OF THE STUDY
 To know the flow of Cash in the organization GOVADA CO-OPERATIVE SUGARS

LIMITED

 To access the efficiency with Sources and Uses of cash were made by the co
ordinance the present year 2013-2014 to 2016-2017.
 To identify the changes in the elements of focus and uses of cash flow
statement in between above mentioned year.

 To present the conceptual framework relating to management of cash flow
statement.
 To analyze and interpret the financial details with the help of cash flow
statement
METHODOLOGY OF THE STUDY
The following are the main sources of date used for this study which are
Collected and compi2led from published and unpublished sources of the Company data. The
published sources are as follows.
1) Management information system published by GOVADA CO-OPERATIVE SUGARS
LIMITED
2) Status Report on GOVADA CO-OPERATIVE SUGARS LIMITED
3) Journals, books and other published reports.
Primary data.
Secondary data.
Primary data:
In the primary method the information has gathered by interacting to the higher
officials and the employees of the company and the large amount of information is referred
from the renowned books and articles of most famous authors on internal marketing. And few
of the information has acquired from the company’s books and presentations. The
information secured by interacting with all the departments.
Secondary data:
In the secondary method of finding information is by conducting survey for the employees
feedback and maintained a form of it in which has all the information on the employees
perception. The analysis of the data is done and gathered information. And in this method I
have taken little information from the internet and companies websites.
LIMITATIONS OF THE STUDY
The limitations of present study are as follows:
1. The study covers a period of FIVE years from 2013-2017.
2. The study does not consider as the flow the funds..
3. Changes in the accounting policies caused to decline in the profits

4. The study does not touch all the units of GOVADA CO-OPERATIVE SUGARS LIMITED
5. Limited span of time is a major limitation for this project.

HISTORY OF THE SUGAR INDUSTRY
Introduction:
India has been known as the original home of sugar and sugarcane. Indian methodology
supports the above fact as it contains legends showing the origin of sugar cane. India is the
second largest producer of sugar cane next to Brazil. Presently, above 4 million hectares of land
is under sugarcane with an average yield of 70 tons per hectare.
India is the largest single producer of sugar including traditional sugarcane sweeteners,
khan sari and Guru Equivalent to 26 million tons raw value followed by Brazil in the second
place at 18.5 million tones. Out of 7 States in last 10 years. India has ranked No.1 position in 7
out of last 10 years. During 1998-99 India produced 17.0 million tons (15lakh tones white
sugar) while Brazil had produced 18.5 million tones.
Traditional sweeteners Guru & Khandhasari are consumed mostly by the rural
population in India. In the production of alternate sweeteners, Guru & Khan Sari were produced
where better standard of living and higher income groups were there. The sweeteners demand
has shifted to white sugar currently; about 1/3 rd sugar cane production is utilized by the Guru
and Khandasari sectors. Being in the small-scale sector, these two sectors are completely free
from controls and taxes, which are applicable to the sugar sector.
The advent of modern sugar processing industry in India began in 1930 with grant of
tariff protection to the India sugar industry. The number of sugar mills increased from 30 in the
year 1930-31 to 135 in the year 1935-36 and the production during the same period increased
from 1.20lakh tones to 9.34lakh tones under the dynamic leadership of the private sector. The
sugar industry is one of the largest Agro based industries in India. It plays an important role in
the national economy. Sugar industry holds the pride of place as an instrument of rural
development.
The extension of sugar cultivation in setting up new sugar factories, since independence
have greatly contributed to the socio-economic development of some rural tracks in the country
with an investment of 2000 cores. The sugar industry provides employment to nearly 4lakhs
workers, above 8 million farmers and engaged in sugar cane cultivation in India. The industry is
largely concentrated in the state of Uttar Pradesh, Bihar, Maharashtra, and Tamil Nadu. Andhra
Pradesh and Karnataka.
In the beginning there was no progress in the sugar industry. Production was granted in
this industry since 1932. Efforts were put to establish the modern industry. Little ahead away
would be made in earlier years as the varieties of cane growers did not process good milling
quality and the yield per acre was low on account of which the cost of production of sugar was
very high. Sugar cane is grown healthy in all parts of India.
DEVELOPMENT OF SUGAR INDUSTRY
There were only 30 factories in India during the year 1931. The number of factories in
operation has grown from 29 to 140 in 1950-51 out of which 100 factories were in northern part
of India. During the next decade the number of factories increased to 174 out of which 11
factories were in the sub-tropical regions of northern India. Finally, the number of factories was
grown to 200 in 1965-66 to 338 in 1984-85 and now presently 420 sugar factories running under
the various managements. Co-operative sugar factories contribute more than 50% of total sugar
factories. There are nearly 230 co-operative sugar factories in India.
In recent years, the location factories have influenced under the disposal of sugar
industry to the south. The sucrose is content in the sugarcane grown in tropical regions in
greater than sub-tropical regions and the development of cane in the south mainly responsible of
bringing about location changes in the industry. The sugar industry organized 3 sectors vise, the
private and public and the co-operative. The co-operative sector of the sugar industry represents
the sugar factories organized on co-operative lines.
Co-operative is a form of organization in which the mentors units due to common
economic necessity and they try to fulfill this necessity by forming an organization. This is an
association where people unit to avoid exploitation by middleman. In case of sugar co-
operatives, the economic necessity of sugar cane farmer is to get a remunerative price for sugar
cane.
The production during the first year plan i.e. 1955-56 was 18.34lakhs tones. The
production during the third year was very low i.e. 9.81lakhs tones. The sugar production during
or t and of the second five-year plan 1960-61 stood at 330.21lakhs tones against the target of
22.90lakhs tones. Thus there was a good achievement in fulfilling the targets. The end of the
third five-year plan 1973-74 against the actual target of the year 47lakh tones. It was low against
the actual target of the year 47lakh tones. It was low against the target. The production during
the year 1979-80 which last year of fourth, five year plan was 38.58lakh tones. The production
during 1969-70 the first year of the fourth five-year plan was all time record of 45.7lakhs tones.
However the production could not be maintained at this level during 1970-71 seasons and sit is
declined to 38.2lakh tones. During that period with a large curry forward stock of about 22lakh
tones from the precious season. The total availability of sugar was still higher at 60lakh tones.
Due to abundance of stocks the government had controlled sugar from 25.05.1971.
However, the production during the year 1971-72 was declined to 13.10lakh tones. As a result
of sharp decline in the production of sugar with the cones quest reduction on available. Sugar
price should be upward trend releasing the difficult situation the industry voluntarily offered to
supply 60 percent of the released monthly notes at fixed price of Rs. 150 per quintal to need the
requirements of domestic consumers. The industry had also offered further 35% production of
exerts.
The sugar cane farmers in this country are poor and do not be have the requisite capital
to install a complete plant and therefore the government contributed the share capital in the way
of providing loan from state government and various financial institutions. These co-operatives
have democratic control and equitable distribution of the returns. A portion of the return is ear-
marked by all the factories for socio-economic development of the area in which these factories
are situated. Thus co-operative through are business organization, have a social purpose and
social obligation, not only towards the members of the units who setup the co-operatives, but
also towards the people who live in the area of surroundings.
SUGAR INDUSTRY IN ANDHRA PRADESH:
Sugar industry is mostly situated in the regions where the land is fertile and suitable for
growing in A.P. It is one among such fertile regions of India and has been a sugar cane
cultivating state for a long time. It is one of the major sugar productions of Khardasari and
Guru till recent past although sugar factories existed in India since 1920.
It was only in 1950, that A.P. had a chance of establishing these factories in A.P. A.P.
Govt. announced a proposal for establishment of 5 more sugar units in
Co-operative sector in April 1982. 178 thousand acres are under sugar cultivation which
constructs 7% of the total acreage in India.
During the recent years, this was decreasing and this figure has come down to the
thousand hectors during 1980-91 which was around 5% of the average figure of India. The
figure for A.P. was 76 tons in 1965-66 when it was 43.7 tons per hector for India almost 80%
higher. The yield per hector in A.P. is a compared to that of mass-producing state like U.P.
where then exit 38.2 tones per hectors in 1978-79 and Bihar where 27-12% per hector in 1978-
79 was present.
The total sugarcane produced in the state is just 8% of the total production in India is
1950-51. The total production is 49.10 thousand tones out of 69.22 thousand tones for 1978-79
this figure has gone up to 9,482 thousand tones which is 36.2% of the total production. This
production for all India in 1978-79 is 38.2%.The total sugar cane produced in the year 1986-87
season of A.P. was Rs 8,800 thousand tones. So the contribution of A.P. in the total production
is 5.52%.
India has been divided into three areas in the sugar recovery attained by factories of
Andhra Pradesh fell into medium recovery for the date during the year 1986-87 was 9.6%.
Andhra Pradesh is the major lead regarding sugar production. The sugar recovery is more then
compared to average sugar crushing season and the average recovery of India crushing season is
low due to more production of average recovery of India. Crushing season if low due to more
production of Guru and Khandasari. The farmers are supplying to that of sugar factories and
transport facilities.
There, the farmers are making for the nearby fields. The cane price also is not favorable
that is price of sugar cane fixed by the factories is low. That is not commercial therefore the
seasonal is short in A.P. so the sugar production in A.P. is unfavorable.
Total no. of factories - 33
Co-operative sectors - 08
Public sectors - 07
Private sectors - 18
A.P. produced more than 310lakhs tones out of a total production in the year 1987-88. In
1979-80 the production was 34 thousand tones out of which 1,017 thousand tons of sugar
production which was 5.15% of total production in A.P has increased sugar production in India.
The total sugar consumed by A.P. excluding Khandasari sugar was 292 thousand tones, where
as in India it was 5,105 thousand tons in 1987.
A.P always has been a surplus state as far as sugar is consumed till 1977-78 during
which years the total production was 5,405 thousand tones yearning a surplus production of
more than 150 thousand tones. During 1978-79 the production of sugar has taken consumption
by the state was 44 thousand tones i.e., 311 thousand tones as against 355 thousand tones
consumption during 1970-80.
The defect has decreased a massive 93 thousand tones i.e., thousand tones. This mostly
was due to lower production of sugar within the state because of poor supply of cane to the
factories. After that the production was raised against the consumption of 483 thousands tones.
That’s why A.P. is performing a major role regarding sugar production. The sugar
recovery is more, when compared to average sugar crushing season is low due to more
production of Guru and Khandasari. The farmers supply to Khandarasi mills due to quick
payment and higher prices than of sugar factories.
COMPANY PROFILE
OF THE CHODAVARAM CO-OPERATIVE SUGAR LIMITED, GOVADA
HISTORICAL BACK GROUND AND AREA OF OPERATION:
The Chodavaram Co-operative Sugars Limited was incorporated in the year 1955
with an object of establishing a sugar factory of 1000 tons at Govada village adjustment to
Chodavaram in Visakhapatnam district during the Second Five Years Plan in the co-
operative sector at the cost Rs.150 lakhs. The factory started its commercial production in
year 1962. Initially it sustained losses and they were completely wiped out by 1972-73 and
the factory made profits till 1976. In the year 1976 expansion of the crushing capacity of
the plant was taken up at a total cost of Rs.130.57 lakhs. The cane crushing with expanded
capacity of 1600 lakhs started from the year 1979.keeping in view the availability of cane
the capacity extended to 2500 TCD in the year 1988 with a layout of Rs.8.5 cores and the
expansion was completely by March 1991. Again the factory was taken up further
expansion of the capacity from 2,500 TCD to 4000 TCD. Along with cogeneration with
exportable power of 6 mega volts (MW) in the year 2001 with an out lay of Rs.36 cores.
The society covers vast area of 209 villages in 13 Mandal of Visakhapatnam

district. Out of when 80% are small and marginal farmers. The total coverage in area of
operation of the factory is 30,000 acres, out of which cane grown in about 20,000 acres us
agreement to the factory as the members are limited to that extent(60% of the factory) zone
which is under rain fed conditions.
Basically the factory is an agro- seasonal industry. The raw material of the factory for the
production of sugar is sugar cane. The growers are from 265 villages which are supplies cane to the
factory. The factory starts its operation most during the first week of December and ends with April/May
depending upon the availability of sugar cane for crushing.
According to the by-law the society is meant for the up liftmen The ideology behind
setting up co-operative sugar factory is to raise the living standard of farmers and
protecting there from the exploiting middleman, and there by promoting their well being.
A popular definition of the term co-operative is that it is an association of persons or

house hold usually of a limited means, who have agreed to work together on a continuing
basis for a common purpose for they which have formed an economic o
Organization, which is jointly, controlled the cost. Risks are benefits and equally
shared among the members. Equity, social justice and self-helped are the major concerns of
the co-operative society.
MEMBERSHIP AND SHARE CAPITAL
Currently the Chodavaram Cooperative Sugar Limited had 12,820 members. The authorized
share capital of the society under by law number 6 of the society is Rs.25crores. As on date the society
the financial paid up share capital of Rs. 1, 74,081 lakhs from its members and 0.35lakhs from
institution. The Government of Andhra Pradesh has contributed an amount of Rs.1088.95lakhs towards
their share in the capital structure of the society.
2. The entire area of operation has been traditionally sugar cane growing belt since so
many decades.
• A part from being located beside Saradariver belt it is centrally located in the cane
growing region.
• Free transportation facilities are available through the zone to draw cane from all
corners in the required time.
• More than 60% of the growers are within radius of 10 kilometers.
• There is an advanced mode of transportation of output through road ways.
With a view to avoid hardship to members residing at long distance, they have
opened unloading centers at various spots. The co-operative society was established on a
day to day service which is jointly controlled and costs, risks, benefits are equally shared
among the members.
OBJECTIVES OF ESTABLISHING CHODAVARAM CO-OPERATIVE SUGARS

LIMITED
The object of the society shall to be promote the economic interests of the members
by encouragement proper development of agriculturalists industries on co-operative lines
and through agriculturalists with special attention and performance to farmers as far as
possible, the advantages of scientific, agricultural production and the benefits of large scale
industries and for the said purpose it shall be completed to society.
To establish a factory for the manufacture of sugar, jiggery and other subsidiary by
products and allied industries and for that purpose.
To a rise share capital and barrow fund either on security of the property of society of
the property of society of otherwise forms co-operative societies, government,
industrial finance co-operation and other sources.
To purchase to take on lease or otherwise acquire land , houses and other building,
light, railway siding may be necessary or expended for the above purpose of or any of
them.
To purchase and install the machinery.
To purchase from members or nonmembers sugar cane or other raw materials and also
to undertake cultivation of sugar cane.
To own or hire transport vehicles in the business of the society.
To construct and take on rent go downs at place of manufacturing as well as outside for
storage and sale of the products.
To do all other things incidental to or necessary for the establishment and running for
the factory.
.ORGANISATIONAL STRUCTURE:
A) CHAIRMAN:-
He shall be responsible for bringing all policy matters before the board and general
body and shall see to the effective implementation of resolutions passed by the side bodies.
He shall preside over all the meetings of the broad and general body.
B) VICE-CHAIRMAN:-
He shall have all powers of the chairmen in the absence of the chairmen. Chairmen
and vice chairman are elected by the members in the members register.
C) MANAGING DIRECTOR:-
The Board of Directors appoints one of the director as the Managing Director on
such terms and conditions as may be decided by the board. However its share capital
contributor was Government of Andhra Pradesh, the managing director shall be appointed
by government on such terms and conditions as they may consider necessary.
Subject to the general powers of the board, the managing director shall have the
following powers, besides such other duties as may be entrusted him from time to time, by
the register till the government and industrial finance cooperation loans repaid in full.
He shall have general control over the administration and over the officers and staff of
the society.
He shall be competent to make all purchases and incur expenditure up to Rs.15, 000/-
for capital expenditure at a time.
He shall be responsible for the general conduct supervision and management of the day
to day business and affairs of the society.
He shall not have power to sanction more than one normal increment.
COMPOSITION OF THE BOARD OF DIRECTORS:-
Subject to such as the general body a form time to time passes the execution.
Two Directors from the Scheduled Castes.
One director from Schedule Tribe.
Two Directors from back ward classes.
Nine Directors open to all categories of society members of which one Director seat is
reserved to be elected from small sugar cane cultivators and one more Director seat is
reserved for non-sugar cane supplier member of the sugar mill.
One Director from non-seasonal employees to be nominated by the Government.
Three directors to be nominated by the government.
Five directors to be nominated by the financial institutions.
Provided, that as and when the nominees of government or industrial finance co-
operation or any other financing institution are withdrawn, the vacancies shall be filled by
sugar cane supply members.
DEPARTMENTS:
The organization has departments. The departmental heads are accountable to

managing director. Managing Director coordinates all the activities of the five departments
of the organization are as follows.
Administrative department.
Accounts department.
Agriculture department.
Engineering department.
Manufacturing department.
ADMINISTRATION DEPARTMENT
The department is headed by the Administrative Officer and Chief Personal Officer.
He is next and performs such duties as may be entrusted to him from time to time by the
Managing Director. Under the Administrative Officer there are 7 sections which are
directly responsible to him. They are secret areal section. General administration, sales,
purchases, stores, go-down, and time office activities. He also looks after welfare and
medical facilities of the employees.
The department also develops good relations between management and trade unions.
The department is the backbone of the whole organization.
2. ACCOUNTS DEPARTMENT
The accounts department headed by Chief Accounts Officer. The department is

divided into three areas.
1. General accounts.
2. Stores accounts.
3. Cane accounts.
His duty involves preparation of financial department and distribution of annual

reports to the members of the society, merchant banks, financial institutions etc. He has to
maintain up to date all accounts books of the factory preparation of necessary financial
reports, periodical budgets, cash flow statement and all income tax returns value added tax
and excise duty returns and formalities.
He has attend all work relating to money transactions, advice management about
through the Managing Director.
3. AGRICULTURE DEPARTMENT
The department is headed by Chief Agriculture Officer. The duties of the chief
agriculture officer can be divided into two distinct spheres.
1. Cane development.
2. Cane procurement
They have to build up proper records such as sugar cane cultivation area register
sugar cane variety, supply contract to the sugar factory inputs supplied register, etc., to
inspect the cane regularly and also to meet the cane growers and guide them properly.
4. ENGINEERING DEPARTMENT
Chief Engineer is the head of the this department. The plant and machinery of the
factory are under the control of chief engineer. He formulates the techniques of current and
economic crushing of the sugar cane shunting to the machinery and equipment related with
the variety of cane quality.
He is responsible for keeping in day to day check on milling, boiler and power house,
performance and steam and power consumption at various sections of the factory. He personally directs
repairs, over hauling and correction of major equipment. He periodically review engineering stores and
review stock position and furnishes indents for purchase for his department. Civil Section, turbines,
boilers, mill house, electrical are the major section of the engineering, department. He also advice
management about rehabilitation, modernizations lay out and replacements labor and staff policy and
ensure that all factory regulations and scrupulously followed and complied with all concerned authorities.
5. MANUFACTURING DEPARTMENT
Chief chemist heads this department. He is responsible for overall operation of

sugar manufacturing of the factory that is from is extraction juice to final bagging of sugar.
The department is to ensure the good quality of the sugar production. He has to co-ordinate
the work of the manufacturing department with that of the engineering and cane
department.
STATEMENT SHOWING SUGAR CANE CRUSHED BY THE CHODAVARAM

CO-OPERATIVE SUGARS LIMITED, GOVADA.
TABLE NO: - 3.1
Profit
Cane IT liability Net profit
Recovery before
Season year crushed in (Rs.In after tax (In
percent tax(Rs.in
MT lakhs lakhs)
lakhs)
2010-2011 3,68,490 10.26 (-)39.35 (-)39.35 (-)39.35
2011-2012 3,97,121 10.45 39.33 15.38 18.95
2012-2013 3,70,478 10.46 53.66 35.96 22.96
2013-2014 3,90,206 10.27 35.60 8.79 26.81
2014-2015 382,560 10.32 16.72 1.50 15.22
2015-2016 395,270 10.11 29.43 5.60 23.83
2016-2017 376,482 10.42 41.44 10.77 30.67

The table shows important parameters of the Chodavaram Cooperative Sugar Ltd during
study period 2008-09 and 2014-15. They are
1. Crushing quantity of sugar cane
1. Sugar recovery rate

2. Profit before tax
3. Income tax provision
4. Profit after tax
The crushing of sugar cane is in the range of 3, 68,490 metric tons and 3, 97,121
metric tons. The variation in the crushing is quite marginal. It is evident that the sugar cane
supply to the mill is almost consistent during the study period.
Sugar cane is crushed to extract juice and price paid to the cane growers depends on
percentage of sugar content in the juice. This is said to be recovery ratio. It varied between
10.11% in 2013-14 and 10.46% in 2010-11. The average recovery ratio is 10.33% which is
considered to be good.
Sugar recovery rate less than 10=poor

Sugar recovery rate above 10 and less than
11=good Sugar recovery rate above 11=excellent.
The sugar mill earned profit in all the years of the study period except 2007-08. It
sustained a net loss of 39.35lakhs in 2008-09. The performance is improved in the
succeeding year (2009-10) and the sugar mill earned a profit before taxes of 39.39lakhs and
after tax profit of 18.95lakhs.
The tempo of making profits continued for the rest of the study period and in the
current year 2014-15, the net profit after taxes was 30.67lakhs (provisional figure).
CADRE WISE EMPLOYEES IN THE CHODAVARAM CO-OPERATIVE SUGARS
LIMITED, GOVADA.
TABLE 3.2
S.no Cadre/category Number of Temporary Total

employees
permanent (seasonal)
1 Managing director 1 -- 1
2 Department head 8 -- 8
3 Supervisors A 19 4 23
B 6 7 13
C 11 8 19
4 CLERICAL GRADE-1 2 -- 2
2 3 -- 4
3 28 17 45
4 65 120 185
5 High skilled workers 17 4 21

Skilled A 28 13 41
Skilled B 69 21 90
Semi-skilled 32 204 236
Un skilled 72 118 190
6 Medical officer consolidated 1 -- 1

& contract
Total 363 516 879
INTRODUCTION
Cash flow is calculated by making certain adjustments to net income by adding or

subtracting differences in revenue, expenses and credit transactions (appearing on the balance
sheet and income statement) resulting from transactions that occur from one period to the
next. These adjustments are made because non-cash items are calculated into net income
(income statement) and total assets and liabilities (balance sheet). So, because not all
transactions involve actual cash items, many items have to be re-evaluated when calculating
cash flow from operations.
For example, depreciation is not really a cash expense; it is an amount that is deducted from
the total value of an asset that has previously been accounted for. That is why it is added back
into net sales for calculating cash flow. The only time income from an asset is accounted for
in CFS calculations is when the asset is sold.
Changes in accounts receivable on the balance sheet from one accounting period to the next
must also be reflected in cash flow. If accounts receivable decreases, this implies that more
cash has entered the company from customers paying off their credit accounts - the amount
by which AR has decreased is then added to net sales. If accounts receivable increase from
one accounting period to the next, the amount of the increase must be deducted from net sales
because, although the amounts represented in AR are revenue, they are not cash.
An increase in inventory, on the other hand, signals that a company has spent more money to
purchase more raw materials. If the inventory was paid with cash, the increase in the value of
inventory is deducted from net sales. A decrease in inventory would be added to net sales. If
inventory was purchased on credit, an increase in accounts payable would occur on the
balance sheet, and the amount of the increase from one year to the other would be added to
net sales.
The same logic holds true for taxes payable, salaries payable and prepaid pharma. If
something has been paid off, then the difference in the value owed from one year to the next
has to be subtracted from net income. If there is an amount that is still owed, then any
differences will have to be added to net earnings. (For mroe insight, see Operating Cash
Flow: Better Than Net Income?)
Investing
Changes in equipment, assets or investments relate to cash from investing. Usually cash
changes from investing are a "cash out" item, because cash is used to buy new equipment,
buildings or short-term assets such as marketable securities. However, when a company
divests of an asset, the transaction is considered "cash in" for calculating cash from investing.
Financing
Changes in debt, loans or dividends are accounted for in cash from financing. Changes in
cash from financing are "cash in" when capital is raised, and they're "cash out" when
dividends are paid. Thus, if a company issues a bond to the public, the company receives cash
financing; however, when interest is paid to bondholders, the company is reducing its cash.
Statement of cash flow in a business's financials
The (total) net cash flow of a company over a period (typically a quarter or a full year) is
equal to the change in cash balance over this period: positive if the cash balance increases
(more cash becomes available), negative if the cash balance decreases. The total net cash flow
is the sum of cash flows that are classified in three areas: Cash receipts and payments must be
classified as operating, investing or financing activities. Frequently, cash flow classification
requires significant judgment. Reasonable conclusions about classifying cash flows might
differ depending on how one assesses the substance of a particular transaction. Judgments are
also often complicated by the fact that some transactions generate cash flows with multiple
cash flow statement classification requirements. For these reasons, the following sections first
excerpt the broad cash flow classification guidance from ASC 230 below for each of the
major categories of cash flow classification — operating, investing and financing. These
excerpts are followed by discussion of many common cash flow classification issues,
including illustrations in which a single transaction or arrangement might result in reporting
cash flows in more than one major cash flow classification category.
1. Operational cash flows:

Operating activities include all transactions and other events that are not defined as investing
or financing activities. Operating activities generally involve producing and delivering goods
and providing services. Cash flows from operating activities are generally the cash effects of
transactions and other events that enter into the determination of net income.
All of the following are cash inflows from operating activities:
 Cash receipts from sales of goods or services, including receipts from

collection or sale of accounts and both short- and long-term notes receivable
from customers arising from those sales. The term goods includes certain loans
and other debt and equity instruments of other entities that are acquired
specifically for resale.

 Cash receipts from returns on loans, other debt instruments of other entities,
and equity securities—interest and dividends.

 All other cash receipts that do not stem from transactions defined as investing
or financing activities, such as amounts received to settle lawsuits; proceeds of
pharma settlements except for those that are directly related to investing or
financing activities, such as from destruction of a building; and refunds from
suppliers.
All of the following are cash outflows for operating activities:
Cash payments to acquire materials for manufacture or goods for resale, including principal
payments on accounts and both short- and long-term notes payable to suppliers for those
materials or goods. The term goods includes certain loans and other debt and equity
instruments of other entities that are acquired specifically for resale.
 Cash payments to other suppliers and employees for other goods or services.

 Cash payments to governments for taxes, duties, fines, and other fees or penalties and
the cash that would have been paid for income taxes if increases in the value of equity
instruments issued under share-based payment arrangements that are not included in
the cost of goods or services recognizable for financial reporting purposes also had
not been deductible in determining taxable income.

 Cash payments to lenders and other creditors for interest.

 Cash payment made to settle an asset retirement obligation.
2.Investment cash flows:
Investing activities include making and collecting loans and acquiring and
disposing of debt or equity instruments and property, plant, and equipment and other
productive assets, that is, assets held for or used in the production of goods or services by the
entity (other than materials that are part of the entity's inventory). Investing activities exclude
acquiring and disposing of certain loans or other debt or equity instruments that are acquired
specifically for resale.Cash flows from purchases, sales, and maturities of available-for-sale
securities shall be classified as cash flows from investing activities and reported gross in the
statement of cash flows.
All of the following are cash inflows from investing activities:
 Receipts from collections or sales of loans made by the entity and of other
entities' debt instruments that were purchased by the entity
 Receipts from sales of equity instruments of other entities and from returns of
investment in those instruments

 Receipts from sales of property, plant, and equipment and other productive assets

 Receipts from sales of loans that were not specifically acquired for resale. That is, if
loans were acquired as investments, cash receipts from sales of those loans shall be
classified as investing cash inflows regardless of a change in the purpose for
holding those loans.
All of the following are cash outflows for investing activities:
 Disbursements for loans made by the entity and payments to acquire debt instruments
of other entities
 Payments to acquire equity instruments of other entities

 Payments at the time of purchase or soon before or after purchase to acquire property,
plant, and equipment and other productive assets, including interest capitalized as part
of the cost of those assets. Generally, only advance payments, the down payment, or
other amounts paid at the time of purchase or soon before or after purchase of
property, plant, and equipment and other productive assets are investing cash
outflows. However, incurring directly related debt to the seller is a financing
transaction and subsequent payments of principal on that debt thus are financing cash
outflows.
3.Financing cash flows:

Cash received from the issue of debt and equity, or paid out as dividends, share
repurchases or debt repayments. Financing activities include obtaining resources from owners
and providing them with a return on, and a return of, their investment; receiving restricted
resources that by donor stipulation must be used for long-term purposes; borrowing money
and repaying amounts borrowed, or otherwise settling the obligation; and obtaining and
paying for other resources obtained from creditors on long-term credit
.
All of the following are cash inflows from financing activities:
 Proceeds from issuing equity instruments


 Proceeds from issuing bonds, mortgages, notes, and from other short- or long-term
borrowing

 Receipts from contributions and investment income that by donor stipulation are
restricted for the purposes of acquiring, constructing, or improving property, plant,
equipment, or other long-lived assets or establishing or increasing a permanent
endowment or term endowment
 Proceeds received from derivative instruments that include financing elements at
inception, whether the proceeds were received at inception or over the term of the
derivative instrument, other than a financing element inherently included in an at-the-
market derivative instrument with no prepayments
 Cash retained as a result of the tax deductibility of increases in the value of equity
instruments issued under share-based payment arrangements that are not included in
the cost of goods or services that is recognizable for financial reporting purposes. For
this purpose, excess tax benefits shall be determined on an individual award basis.
All of the following are cash outflows for financing activities:
 Payments of dividends or other distributions to owners, including outlays to reacquire

the entity's equity instruments.
 Repayments of amounts borrowed.

 Other principal payments to creditors who have extended long-term credit. which
indicates that most principal payments on seller-financed debt directly related to a
purchase of property, plant, and equipment or other productive assets are financing
cash outflows.
 Distributions to counterparties of derivative instruments that include financing
elements at inception, other than a financing element inherently included in an at-the-
market derivative instrument with no prepayments. The distributions may be either at
inception or over the term of the derivative instrument.
 Payments for debt issue costs.
Pharma company cash flow classification
Pharma companies typically capture information about the cost of investments

acquired and the proceeds from sales, maturities and repayments of investments to
prepare a statement of cash flows for the Annual Statement they file with state
regulatory authorities. As a result, information about the gross cash receipts and
payments from these activities is readily available.
Cash and cash equivalents :
Pharma companies generally present short-term investments, including those that

meet the definition of a cash equivalent, in the balance sheet with investments rather
than with cash. As the statement of cash flows must reconcile to similarly titled line
items or subtotals of cash or cash and cash equivalents in the balance sheet, most
pharma companies reconcile to cash rather than cash and cash equivalents in the
statement of cash flows.
Separate accounts :
Assets held in separate accounts that meet the conditions in ASC 944-80, Financial
Services-Pharma -Separate Accounts, should be measured at fair value and reported in
summary total with an equivalent summary total reported for related liabilities. The
related investment performance (including interest, dividends, realized gains and
losses and changes in unrealized gains and losses) and the corresponding amounts
credited to the separate account holder should be offset within the same statement of
operations line item netting to zero. As a result, an pharma entity does not present in
its statement of cash flows the cash flows of the separate accounts. The financial
statements of the separate account itself should present the cash flows related to its
operating, investing and financing transactions.
Presenting investing activities :
Pharma companies hold a variety of investments, including stocks, bonds, mortgage

loans and real estate. ASC 230 requires separate presentation of cash receipts and cash
payments related to investing activities, but it does not provide guidance on the level
of detail to be presented for the various types of investments. Although pharma
companies provide cash flow information by type of investment in the Annual
Statement filed with state regulatory authorities, and detailed information is available,
we do not believe that this level of detail is required by ASC 230, and as such,
companies should use their judgment about the level of detail they provide.
Universal life pharma :
Universal life pharma (also known as flexible premium life pharma and interest
sensitive life pharma) is Financial Services-Pharma - Pharma Activities. A universal
life-type contract is characterized by Assessments by the insurer against the
policyholder account balance for mortality coverage and contract administration that
are not fixed and guaranteed by the contract
Interest credited to the policyholder account balance (not fixed or guaranteed)
Universal life-type contracts are similar to certain deposits of a financial institution so
the statement of cash flow presentation would show cash receipts from policyholders
and payments representing a return of policyholder balances as financing activities,
similar to the presentation by a financial institution of sales and maturities of
certificates of deposit. Interest credited to policyholder accounts would be treated as
an operating cash payment for statement of cash flow presentation. This presentation
is consistent with the way financial institutions present interest credited on certificates
of deposit. Charges for mortality, administration and similar items that are recognized
as revenue in the pharma company’s income statement should be treated as operating
cash inflows for statement of cash flow presentation.
Policy acquisition costs :
Pharma companies defer policy acquisition costs and amortize these costs to expense
over the policy term. These costs should be presented as an operating cash flow.
Acquisition costs usually are inseparable from policy liability determinations, and the
change in policy liabilities is presented as a reconciling item in the reconciliation of
net income and net cash flow from operating activities.
Fund withheld copharma :
Repharma arrangements such as fund withheld copharma and similar arrangements

involving modified copharma, contain an embedded derivative that must be bifurcated
and accounted for separately To illustrate, assume that an pharma company and a
reinsurer enter into a copharma arrangement. Next, the reinsurer extends a
hypothetical collateralized loan of an underlying pool of assets supporting the
repharma arrangement back to the pharma company. Finally, the companies enter into
a derivative (in this example, a total return swap) in which the return on the
underlying pool of assets is paid by the pharma company in satisfaction of the pharma
company’s obligation to pay off the hypothetical collateralized loan from the
reinsurer.
Difference Advantage Disadvantage and Uses of Cash Flow Statement & Funds Flow
Statement
A Cash Flow statement is a statement showing changes in cash position of the firm from one
period to another. It explains the inflows (receipts) and outflows (disbursements) of cash over
a period of time. The inflows of cash may occur from sale of goods, sale of assets, receipts
from debtors, interest, dividend, rent, issue of new shares and debentures, raising of loans,
short-term borrowing, etc. The cash outflows may occur on account of purchase of goods,
purchase of assets, payment of loans loss on operations, payment of tax and dividend, etc.
A cash flow statement is different from a cash budget. A cash flow statement shows the cash
inflows and outflows which have already taken place during a past time period. On the other
hand a cash budget shows cash inflows and outflows which are expected to take place during
a future time period. In other words, a cash budget is a projected cash flow statement.
A Funds Flow statements states the changes in the working capital of the business in relation
to the operations in one time period. For example, if the inventory of the business increased
from Rs 1, 40,000 to Rs 1, 60,000, then this increase of Rs 20,000 is the increase in the
working capital for the corresponding period and will be mentioned on the funds flow
statement.
Difference between Funds Flow Statement and Cash Flow Statement
Basis of Funds Flow Statement Cash Flow Statement

Difference
1. Basis of Analysis Funds flow statement is based Cash flow statement is based on
on broader concept i.e. narrow concept i.e. cash, which is
working capital. only one of the elements of
working capital.
2. Source Funds flow statement tells Cash flow statement stars with
about the various sources the opening balance of cash and
from where the funds reaches to the closing balance of
generated with various uses to cash by proceeding through
which they are put. sources and uses.
3. Usage Funds flow statement is more Cash flow statement is useful in

useful in assessing the long- understanding the short-term
range financial strategy. phenomena affecting the liquidity
of the business.
4. Schedule of In funds flow statement In cash flow statement changes in

Changes in changes in current assets and current assets and current
Working Capital current liabilities are shown liabilities are shown in the cash
through the schedule of flow statement itself.
changes in working capital.
5. End Result Funds flow statement shows Cash flow statement shows the
the causes of changes in net causes the changes in cash.
working capital.
6. Principal of Funds flow statement is in In cash flow statement data

Accounting alignment with the accrual obtained on accrual basis are
basis of accounting. converted into cash basis.
Advantages of Cash Flow Statement
4. It shows the actual cash position available with the company between the two
balance sheet dates which funds flow and profit and loss account are unable to show. So it is
important to make a cash flow report if one wants to know about the liquidity position of the
company.
5. It helps the company in accurately projecting the future liquidity position of the
company enabling it arrange for any shortfall in money by arranging finance in advance and
if there is excess than it can help the company in earning extra return by deploying excess
funds.
6. It acts like a filter and is used by many analyst and investors to judge whether
company has prepared the financial statements properly or not because if there is any
discrepancy in the cash position as shown by balance sheet and the cash flow statement , it
means that statements are incorrect.
Disadvantages of Cash Flow Statement
3. Since it shows only cash position, it is not possible to deduce actual profit and
loss of the company by just looking at this statement.
4. In isolation this is of no use and it requires other financial statements like

balance sheet, profit and loss etc…, and therefore limiting its use.
Advantages of Fund Flow Statements
A Funds flow statement is prepared to show changes in the assets, liabilities and equity
between two balance sheet dates, it is also called statement of sources and uses of funds. The
advantages of such a financial statement are many fold. Some of these are:
5. Funds flow statement reveals the net result of Business operations done by the
company during the year.
2. In addition to the balance sheet, it serves as an additional reference for many
interested parties like analysts, creditors, suppliers, government to look into financial
position of the company.
3. The Fund Flow Statement shows how the funds were raised from various
sources and also how those funds were deployed by a company, therefore it is a great tool
for management when it wants to know about where and from what sources funds were
raised and also how those funds got utilized into the business.
4. It reveals the causes for the changes in liabilities and assets between the two balance
sheet dates therefore providing a detailed analysis of the balance sheet of the
company.
5. Funds flow statement helps the management in deciding its future course of plans and
also it acts as a control tool for the management.
6. Funds flow statement should not be looked alone rather it should be used along with
balance sheet in order judge the financial position of the company in a better way.
Disadvantages of Fund Flow Statements
1. Funds flow statement has many advantages; however it has some disadvantages
or limitations also. Let’s look at some of the limitations of funds flow statement.
2. Funds Flow statement has to be used along with balance sheet and profit and loss
account for inference of financial strengths and weakness of a company it cannot be
used alone.
3. Fund Flow Statement does not reveal the cash position of the company, and that
is why company has to prepare cash flow statement in addition to funds flow statement.
4. Funds flow statement only rearranges the data which is there in the books of
account and therefore it lacks originality. In simple words it presents the data in the
financial statements in systematic way and therefore many companies tend to avoid
preparing funds flow statements.
5. Funds flow statement is basically historic in nature, that is it indicates what

happened in the past and it does not communicate anything about the future, only
estimates can be made based on the past data and therefore it cannot be used the
management for taking decision related to future.
Difference between Cash Flow Statement and Income Statement
Cash Flow Statement Income Statement
1. It is disclosing the reasons for change in 1. The Statements narrates the item of cost
working capital i.e., where from the working and revenue to arrive at the figures of profit
capital cash has been applied. and loss earned / incurred during a
particular period of time.
2. Income Statement helps the preparation of 2. Cash Flow Statement doesn’t help
Cash Flow Statement in as much as one source preparation of income statement
of cash i.e., cash from operation is found out
from the income statement
3. Cash raised are matched with cash used. No 3. Expenses are matched with income in
distinction is made between capital and order to find out the result of operation.
revenue items Only revenue items are considered
Difference between Cash Flow Statement and Position Statement
Cash Flow Statement Position Statement
1. It is a Statement changes in financial 1. It is statement of financial position

position.
2. It shows the amount of changes during 2. It present the amount of assets and
the particular period of time. liabilities at a particular point of time
3. It doesn’t analyze the change in current 3. It shows all the accounting liabilities
asset and current liability. whether current or non-current
4. It is a analytical statement analyzing 4. It is not a analytical statement hence not

form where they have been used, hence that much useful for decision making as
more useful. the cash flow statement
Page No : 37
Importance of cash flow statement:
The information which is provided by cash flow statement is neither available in the
balance sheet nor in the income statement and hence its important. The changes which have
taken place in between two accounting dates are highlighted by cash flow statement. A lay
man cannot grasp the underlying significance of achievements and progress of the company
simply by a personal of the balance sheet and income statement of different years. The
comparative and analytical study presented by the statement giving the details of sources and
uses of cash during a given period of immense help to the users of information. It is very
useful tool in analytical kit of the management also, besides the outsiders, in order to have ‘at
a glance’ appraisal of the financial and operating performance of a company. Since the
statement shows the extent to which the working capital has been effectively put to use, the
management’s task of taking policy decision regarding investment, dividends etc, is great
facilitated.
The projected cash flow statement can also be prepared and then budgetary control
and capital expenditure control can be exercised to the benefit of the entire organization.
Uses of Cash Flow Statement:
Cash flow statement of a company is of great value to management shareholders,

creditors, bankers, money lending institutions etc.,
 Informative value:- The financial consequence of business operation are clearly

Explained in details by a cash flow statement some of the problems which crop up in
the minds of investors are well solved by a simple perusal of this statement for e.g.,
1. Where have the profit gone.
2. Why does an imbalance exist between liquidity position and profitability position of
enterprise?
 Forecasting value:- A projected cash flow statement can be prepared and resources
can be properly allocated after an analysis of the present state of affairs. The optimal
utilization of available cash in necessary for the overall growth of the enterprise. The
cash flow statement prepared in advance given a clear direction to the management in
This raged.
 Testing value:- Whether the working capital has been effectively is used or not by the
management can well be tested by cash flow statement. Whether working capital has
been maintained at proper level, and whether it is adequate or inadequate can be
known by a study of the statement. The management is warned against the injudicious
uses of cash.

 Decision-making value:- Since overall credit worthiness of the enterprise is known,
creditors and money lenders can decide as to whether they have to provide loans to
company or not. The sources of raising cash and their application help the
shareholders to decide whether the management of the business is an enlightened or
not regarding managing cash.
Ways Companies Can Augment Reported Cash Flow
Common methods include:
Sales - Sell the receivables to a factor for instant cash. (leading)

Inventory - Don't pay your suppliers for an additional few weeks at period end.
(lagging)
Sales Commissions - Management can form a separate (but unrelated) company
and act as its agent. The book of business can then be purchased quarterly as an
investment.
Wages - Remunerate with stock options.
Maintenance - Contract with the predecessor company that you prepay five years
worth for them to continue doing the work
Equipment Leases - Buy it
Rent - Buy the property (sale and lease back, for example).
Oil Exploration costs - Replace reserves by buying another company's.
Research & Development - Wait for the product to be proven by a start-up lab;
then buy the lab.
Consulting Fees - Pay in shares from treasury since usually to related parties
Interest - Issue convertible debt where the conversion rate changes with the unpaid
interest.
Cash Flow Management
By: Dr. William R. Osgood
Cash - the organization's most precious asset. Control your cash before it controls you. Cash
flow management is a problem for almost any firm, large or small. The worst symptom of the
problem: the business runs out of cash. Watching a business floundering, running out of cash
even as it makes great sales and profits is painful. Painful though it may be, it is common and
repeatedly the cause of business failure.
Small businesses are especially vulnerable to cash flow problems since they frequently
operate with inadequate cash reserves or none at all and, worse, tend to miss the implications
of a negative cash flow until it's too late. However, even in larger organizations, the
departmental or strategic business unit (SBU) budget is often as rigid - exceed your spending
budget and you are out of business as well.
For financing purposes, cash flow projections are generally the most crucial aspect of
the business plan. Bankers and other outside financing intermediaries will almost always look
for a cash flow analysis in preference to any other financial statement, because this will show
how the loan can be repaid. In larger companies, the cash budget for a new project or
expansion is critical to the overall decision to commit funds and move forward..
Why is cash flow so important? If the cash inflows exceed the cash outflows, the business
can continue operations. If the cash outflows exceed the inflows, the business RUNS OUT
OF CASH and grinds to a halt. Even if the imbalance is only for a short period, it can spell
disaster.
In its simplest form, cash flow refers to the flows of cash, literally, into and out of the
business. Think in terms of actual cash, dollar bills, flowing in and out of the business, and
then identify both their sources and uses. This is cash-flow analysis.
CASH FLOW
Timing and cash flow are inseparable. Payments to suppliers are typically expected
often even before customers of the business pay their bills. As a result, the operation is very
likely to have a negative cash flow when it grows dramatically. Periods of change are always
reflected in an altered cash flow. If sales fall off, the cash flow slows down. Interestingly
enough even if sales increase, the cash flow may stop completely or even become negative
(more out than in). Think of the impact of credit sales on cash flow, for example. One-time
events such as population shifts or changes in competition could trigger such consequences.
More commonly, seasonal fluctuations of the business may also pose cash flow problems
where a build-up of inventories must precede the sales cycle (such as a toy business prior to
the Christmas holidays).
Whatever the cause, the underlying message is simple: Run out of cash and the business
is in trouble. Even if it is possible to raise more money from other sources, sooner or later the
timing of cash inflows must match the outflows if the business is to survive.
How to get cash flow under control? It's not easy. Some businesses never achieve cash
flow control. These businesses are always in trouble, chronically overdrawn, slow in paying
bills, and will eventually fold. They fold though, only after their owner/managers have spent
a great deal of time worrying and probably spent all of their personal assets trying to cover
the operating deficits. This kind of complication need not be an integral part of business
management. Instead it is essential to PLAN and SCHEDULE so that cash flow for the
business is positive
. Cash flow management does not need to be mysterious or complex. Managing cash is
all about timing the inflows and outflows. Cash Flow Analysis starts the process. This can be
as simple as going to your check book or accounting system and analyzing your receipts and
disbursements over the past few months. A pattern is likely to emerge. What are the revenue
sources, and how consistent are they from month to month? As well, what are the
expenditures, and how repeatable are they from month to month? Next, look at the incoming
revenue stream (Accounts Receivable) or your sales forecast to confirm and further predict
cash inflows, and your Accounts Payables to build a pattern of required future disbursements.
Match the two. Is there a positive or negative cash flow?
If there is a negative cash flow, the deficit needs to be covered from somewhere. There
are two options. Spend less, or get more (increase revenues). Even it the cash flow is positive,
inspecting the individual elements may further improve operations. Are there cash inflows or
outflows that can be changed?
The balance sheet, income statement, and cash flow statement are the three generally
accepted financial statements used by most businesses for financial reporting. All three
statements are prepared from the same accounting data, but each statement serves its own
purpose. The purpose of the cash flow statement is to report the sources and uses of cash
during the reporting period.
Structure of the Cash Flow Statement
The most commonly used format for the cash flow statement is broken down into three
sections: cash flows from operating activities, cash flows from investing activities, and cash
flows from financing activities.
Cash flows from operating activities are related to your principal line of business and include
the following:
Cash receipts from sales or for the performance of services

Payroll and other payments to employees
Payments to suppliers and contractors
Rent payments
Payments for utilities
Tax payments
Investing activities include capital expenditures – disbursements that are not charged to
expense but rather are capitalized as assets on the balance sheet. Investing activities also
include investments (other than cash equivalents as indicated below) that are not part of your
normal line of business. These cash flows could include:
Purchases of property, plant and equipment

Proceeds from the sale of property, plant and equipment
Purchases of stock or other securities (other than cash equivalents)
Proceeds from the sale or redemption of investments
Financing activities include cash flows relating to the business’s debt or equity financing:
Proceeds from loans, notes, and other debt instruments

Installment payments on loans or other repayment of debts
Cash received from the issuance of stock or equity in the business.
Cash for purposes of the cash flow statement normally includes cash and cash
equivalents. Cash equivalents are short-term, temporary investments that can be readily
converted into cash, such as marketable securities, short-term certificates of deposit, treasury
bills, and commercial paper. The cash flow statement shows the opening balance in cash and
cash equivalents for the reporting period, the net cash provided by or used in each one of the
categories (operating, investing, and financing activities), the net increase or decrease in cash
and cash equivalents for the period, and the ending balance.
There are two methods for preparing the cash flow statement – the direct method and the
indirect method. Both methods yield the same result, but different procedures are used to
arrive at the cash flows.
Direct Method
Under the direct method, you are basically analyzing your cash and bank accounts to
identify cash flows during the period. You could use a detailed general ledger report showing
all the entries to the cash and bank accounts, or you could use the cash receipts and
disbursements journals. You would then determine the offsetting entry for each cash entry in
order to determine where each cash movement should be reported on the cash flow statement.
Another way to determine cash flows under the direct method is to prepare a
worksheet for each major line item, and eliminate the effects of accrual basis accounting in
order to arrive at the net cash effect for that particular line item for the period. Some
examples for the operating activities section include:
Cash receipts from customers:
Net sales per the income statement

Minus ending balance in accounts receivable
Equals cash receipts from customers
Plus beginning balance in accounts receivable
Cash payments for inventory:
Ending inventory
Minus beginning inventory
Plus beginning balance in accounts payable to vendors
Minus ending balance in accounts payable to vendors
Equals cash payments for inventory
Cash paid to employees:
Salaries and wages per the income statement

Plus beginning balance in salaries and wages payable
Minus ending balance in salaries and wages payable
Equals cash paid to employees
Cash paid for operating expenses:
Operating expenses per the income statement

Minus depreciation expenses
Plus increase or minus decrease in prepaid expenses
Plus decrease or minus increase in accrued expenses
Equals cash paid for operating expenses
Taxes paid:
Tax expense per the income statement

Plus beginning balance in taxes payable
Minus ending balance in taxes payable
Equals taxes paid
Interest paid:
Interest expense per the income statement

Plus beginning balance in interest payable
Minus ending balance in interest payable
Equals interest paid
Under the direct method, for this example, you would then report the following in the cash
flows from operating activities section of the cash flow statement:
Cash receipts from customers

Cash payments for inventory
Cash paid to employees
Cash paid for operating expenses
Taxes paid
Interest paid
Equals net cash provided by (used in) operating activities
Similar types of calculations can be made of the balance sheet accounts to eliminate the
effects of accrual accounting and determine the cash flows to be reported in the investing
activities and financing activities sections of the cash flow statement
Indirect Method
In preparing the cash flows from operating activities section under the indirect method,
you start with net income per the income statement, reverse out entries to income and expense
accounts that do not involve a cash movement, and show the change in net working capital.
Entries that affect net income but do not represent cash flows could include income you have
earned but not yet received, amortization of prepaid expenses, accrued expenses, and
depreciation or amortization. Under this method you are basically analyzing your income and
expense accounts, and working capital. The following is an example of how the indirect
method would be presented on the cash flow statement:
Net income per the income statement
Minus entries to income accounts that do not represent cash flows
Plus entries to expense accounts that do not represent cash flows
Equals cash flows before movements in working capital
Plus or minus the change in working capital, as follows:

An increase in current assets (excluding cash and cash equivalents) would be shown
as a negative figure because cash was spent or converted into other current assets,
thereby reducing the cash balance.
A decrease in current assets would be shown as a positive figure, because other

current assets were converted into cash.
An increase in current liabilities (excluding short-term debt which would be reported

in the financing activities section) would be shown as a positive figure since more
liabilities mean that less cash was spent.
A decrease in current liabilities would be shown as a negative figure, because cash

was spent in order to reduce liabilities.
The net effect of the above would then be reported as cash provided by (used in) operating
activities.
The cash flows from investing activities and financing activities would be presented the same
way as under the direct method.
BALANCE SHEET AS ON 31ST MARCH 2015 (in lakhs)
S.NO PARTICULARS AS AT 31-3- AS AT 31-3-2014

2015
1 EQUITY AND LIABILITIES
i) Shareholder’s funds
Share capital 30,199.22 30,199.22
Reserves and surplus (1,11,737,42) (1,11,116.45)
ii) Non- current liabilities
Long term borrowings 37,221.25 37,221.25

Other long term liabilities 1,571.78 1,190.75
Long term provisions 11,974.48 12,429.63
Total Non –current liabilities 50,767.51 50,841.63
iii) Current liabilities
Short term borrowing 9,608.18 10,360.33
Trade payables 20,242.42 19,276.93
Other current liabilities 85,729.31 89,060.38
Short term provisions 15,702.31 19,096.93
Total current liabilities 1,54,391.55 1,46,873.99
Total ( I + ii + iii) 1,00,511.53 1,11,718.96
2 Assets
i) Non- current assets
Fixed assets
Tangible assets 7,384.13 7,596.31
In tangible assets 3.61 -
Capital work – in – progress 697.37. 1,155.74
Long term loans and advances 418.34 380.57
Other non – current assets 7,413.14 8,221.95
Total Non – current Assets 15,916.59 17,327.57
ii) Current Assets
Inventories 13,608.5 13,569.38
Trade receviables 17,888.34 23,015.32
Cash and bank balances 40,406.94 47,184.48
Short term loans and advances 2,774.39 4,668.58
Other current assets 9,916.68 5,926.63
Total current assets 85,161.95 94,634.39
Total ( I + ii) 1,00,511.53 1,11,718.96
PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 31ST MARCH 2015 (IN LAKHS)
S.NO PARTICULARS YEAR ENDED 31-3-2015 YEAR ENDED 31-3-2014

3 INCOME
Turnover
(revenue from operations) 45,339.99 48,384.17
Less. Taxes and duties (2,295.14) (2,080.68)
Net turnover 43,044.85 46,303.49
Other incomes 6,566.65 7866.33
Total incomes 49,611.50 54,169.82
4 EXPENSES
material consumed 18,605.01 23,838.90
Sub- contracting and other direct 9,954.61 7691.31
expenses
Employees benefits 18,789.59 18,306.66
Other expenses 2,740.45 2,642.41
Internet and finance cost 925.52 1,777.08
Depreciation 752.52 788.77
Provision and losses 1,913.06 4,067.13
Prior period expenditure (net) 812.82 841.05
Transfers (289.85) (266.10)
Total expenditures 54,230.73 59,687.21
5 Profit before expenditure and (4,592.23) (5,517.39)
extraordinary items and tax (3-4)
6 Exceptional terms – income / (28,74) -
(expenditure)
7 Profit before extraordinary items and (4,620.97) (5,517.39)
Tax(5-6)
8 Extraordinary items- income / - -
(expenditure)
9 Profit before tax (7-8) (4,620.97) (5,517.39)
10 Taxes - -
11 Profit / (loss) for the period (9-10) (4,620.97) (5,517.39)
12 Earning per equity share (basic) (153) (183)
CASH FLOW STATEMENTS FOR THE YEAR 31-MARCH-2015 (IN LAKHS)
PARTICUALRLS YEAR ENDED YEAR ENDED

31-3-2016 31-3-2015
A. Cash flow from operating activities
Net profit / (loss) (3,876.36) (4,676.34)
Extra- ordinary items & exceptional items 3,824.74 28.74
Prior period expenditure / (income) net 25.15 812.82
FE variation expenditure/ (income) - -
Net profit/loss before extraordinary prior period items & FE 1.819 (16,203.11)
variation
Adjustments for:
Interest and finance charges 925.52 1777.08
Interest received 141.19 (3,634.79)
Loss / (profit) on sale of fixed assets (1.41) -
Operating cash flow before working capital changes, extra – 3,642.33 (14,516.57)
ordinary prior period items
Exceptional extraordinary prior period items : net receipt 3,824.74 -
FE variation 96.95 -
Operating cash flow before working capital & after extra – (3,083.89) (6,557.81)
ordinary & exceptional item, prior period items and FE variation
Adjustment for before working capital changes
Inventories (39.21) 11,749.74
Trade receivables 3,802.166 (4,984.60)
Trade and other payables (5834.32) (6,130.35)
Cash generated from operation (A) (5,155.24) (5,923.02)
B. Cash flow from investing activities
Purchase of fixed assets (545.76) (875.35)
Capital work in progress 458.35 287.70
Sale of fixed assets 1.60 -
Interest received 141.19 -
Net cash flows from investing activities 55.38 3,047.14
c. cash flow from financing activities
Proceeds from share capitals - -
Proceeds from borrowings (752.15) -
Interest paid (925.52) (1777.08)
Net cash from financing activities (c) (1,677.67) (1,899.06)
D. net increase / (decrease) in cash & cash equivalents (6,777.5) (4774.94)
Cash & cash equivalents at the beginning of the year 47,184.47 51,959.43
Cash & cash equivalents at the end of the year. 40,406.94 47,184.47
S.NO PARTICULARS AS AT 31-3-2016 AS AT 31-3-2015

iv) Shareholder’s funds
Share capital 30,199.22 30,199.22
Reserves and surplus (1,32,527.83) (1,11,737.42)
v) Non- current liabilities
Other long term liabilities 9,044 1,571.78
Total Non –current liabilities 56,001.49 50,767.51
vi) Current liabilities
Short term borrowing 8,842.85 9,608.18
Trade payables 19,908.44 20,242.42
Other current liabilities 1,00,073.41 85,729.31
Total current liabilities 1,46,873.99 1,54,391.55
Total ( I + ii + iii) 1,00,546.87 1,00,511.53
2 Assets
iii) Non- current assets
Fixed assets
Tangible assets 6,692.03. 7,384.13
In tangible assets 12.85 3.61
Capital work – in – progress 321.01 697.37
Long term loans and advances 6,438.22 418.34
iv) Current Assets
Inventories 14,221.41 13,608.5
Trade receviables 13,218.21 17,888.34
Other current assets 5,045.36 9,916.68
Total ( I + ii) 1,00,546.87 1,00,511.53

3 INCOME
Turnover
Net turnover 28,151.06 43,044.85
Other incomes 2,885.06 6,566.65
Total incomes 31,036.14 49,611.50
4 EXPENSES
material consumed 13,061.98 18,605.01
Sub- contracting and other direct 10,610.28 9,954.61
expenses
Employees benefits 16.046.46 18,789.59
Internet and finance cost 1,225.10 925.52
Provision and losses 3,190.37 1,913.06
Prior period expenditure (net) 25.15 812.82
Transfers - (289.85)
5 Profit before expenditure and (16,458.93) (4,592.23)
6 Exceptional terms – income / (3,824.74) (28,74)
(expenditure)
7 Profit before extraordinary items and (20,283.67) (4,620.95)
Tax(5-6)
(expenditure)
9 Profit before tax (7-8) 20,283.67 (4,620.97)
10 Taxes - -
11 Profit / (loss) for the period (9-10) (20,283.67) (4,620.97)
12 Earning per equity share (basic) (672) (153)

31-3-2016 31-3-2015
Net profit / (loss) (16,664.45) (3,876.36)
Extra- ordinary items & exceptional items 3,824.74 3,824.74
Prior period expenditure / (income) net 25.15 25.15
FE variation expenditure/ (income) - -
Net profit/loss before extraordinary prior period items & FE 1,819.54 1,819
variation
Adjustments for: -
Interest and finance charges 1,225.10 925.52
Interest received (209.25) 141.19
Loss / (profit) on sale of fixed assets (10.86) (1.41)
Operating cash flow before working capital changes, extra – 3,642.33 3,642.33
Exceptional extraordinary prior period items : net receipt - 3,824.74
FE variation 230.67 96.95
Operating cash flow before working capital & after extra – (18,597.13) (3,083.89)
Inventories (612.81) (39.21)
Trade receivables 4,066.56 3,802.16
Trade and other payables 16,451.76 (5834.32)
Cash generated from operation (A) 1,308.38 (5,155.24)

Sale of fixed assets 11.07 1.60
Interest received 209.25 141.19
Net cash flows from investing activities 91.02 55.38
Proceeds from borrowings (765.33) (752.15)
Interest paid (1,225.10) (925.52)
Net cash from financing activities (c) (1,990.43) (1,677.67)
D. net increase / (decrease) in cash & cash equivalents (591.03) (6,777.5)
S.NO PARTICULARS AS AT 31-3-2017 AS AT 31-3-2016

vii) Shareholder’s funds
Share capital 30,199.22 30,199.22
Reserves and surplus (1,30,627.39) (1,32,527.83)
viii) Non- current liabilities
Other long term liabilities 7,299.97 9,044
Total Non –current liabilities 53.864.28 56,001.49
ix) Current liabilities
Short term borrowing 10744.53 8,842,85
Trade payables 19,118.28 19,908.44
Other current liabilities 1,06,086.46 1,00,073.41
Total current liabilities 1,54,391.55 1,46,873,99
Total ( I + ii + iii) 1,07,827.66 1,00,546.87
2 Assets
v) Non- current assets
Fixed assets
Tangible assets 6,057,51 6,692.03
In tangible assets 9.08 12.85
Capital work – in – progress 250.94 321.01
Long term loans and advances 6,933.63 6,438.22
vi) Current Assets
Inventories 29,938.77 14,221.41
Trade receviables 22.701.97 13,218.21
Other current assets 13,805 5,045.36
Total ( I + ii) 1,07,827.66 1,00,546.87

3 INCOME
Turnover
Net turnover 58,477.36 28,151.06
Other incomes 6,378.61 2,885.06
Total incomes 64,855.97 31,036.14
4 EXPENSES
material consumed 24,595,96 13,061.98
Sub- contracting and other direct 14,023.19 10,610.28
expenses
Employees benefits 14,199.10 16,046.46
Internet and finance cost 1400.23 1,225.10
Provision and losses 4,617,77 3,190.37
Prior period expenditure (net) (384.39) 25.15
Transfers - -
5 Profit before expenditure and 1900.44 (16,458.93)
6 Exceptional terms – income / - (3,824.74)
(expenditure)
7 Profit before extraordinary items and 1900.44 (20,283.67)
Tax(5-6)
(expenditure)
9 Profit before tax (7-8) 1900.44 (20,283.67)
10 Taxes - -
11 Profit / (loss) for the period (9-10) 1900.44 (20,283.67)
12 Earning per equity share (basic) 63 (672)

31-3-2017 31-3-2016
Net profit / (loss) 1900.44 (16,664.45)
Extra- ordinary items & exceptional items - 3,824.74
Prior period expenditure / (income) net (348.39) 25.15
FE variation expenditure/ (income) 267.49 -
Net profit/loss before extraordinary prior period items & FE 1,819.54 1,819.54
variation
Adjustments for: -
Interest and finance charges 1400.23 1,225.10
Interest received (264.52) (209.25)
Loss / (profit) on sale of fixed assets (13.2) (10.86)
Operating cash flow before working capital changes, extra – 3642.33 3,642.33
Exceptional extraordinary prior period items : net receipt - -
FE variation 267.49 230.67
Operating cash flow before working capital & after extra – 3723.33 (18,597.13)
Inventories (15,717.36) (612.81)
Trade receivables (11,838.68) 4,066.56
Trade and other payables - 16,451,76
Cash generated from operation (A) (20,354.04) 1,308.38
Sale of fixed assets 27.23 11.07
Interest received 264.52 209.25
Net cash flows from investing activities 285.17 91.02
Proceeds from borrowings 1,901.68 (765.33)
Interest paid (1400.23) (1,225.10)
Net cash from financing activities (c) 501.45 (1,990.43)
D. net increase / (decrease) in cash & cash equivalents (19,566.89) (591.03)
FINDINGS
 Every organization has pre-determined set of objectives and goals, but reaching these
objectives and goals only planning and executing of the plans economically.
 The GOVADA CO-OPERATIVE SUGARS LIMITED is objectives of planning promoting
and organizing an integrated development of central company.

 The organization needs the capable personalities as management to lead the
organization successfully, the management makes the plans and implement of these
plan are expressed in terms of budget and budgetary control.
 The GOVADA CO-OPERATIVE SUGARS LIMITED has budget process in two stages.
One is capital expenditure budget and another is operating maintains budget, the
capital expenditure budget shows the list of capital projects selected for investment
along with their estimated cost, operating and maintains budgets refers used in the
organization like long term budgets, research and development budget and budget for
consultancy.
 The GOVADA CO-OPERATIVE SUGARS LIMITED is to make available quality service

efficient resources and implementation of sophisticated technology and also creating
ambience of collective working of its employees.
SUGGESTIONS
Planning has become the primary function of management most of the planning
relates to individuals and individuals proposals. Budgets are nothing but his express, largely
in financial terms. Budgetary controls have, therefore become and essential tool of
management for controlling and maximizing profits.
 The company objectives of the organization and how they can be achieved
through budgetary control.
 Time tables for all stages of budgeting follow.

 Reports, statements, forms and others record to be maintained.
Continuous comparison of actual performance with budgeted performance.

CONCLUSIONS
o The GOVADA CO-OPERATIVE SUGARS LIMITED Net Profit is showing negative

profit in the year 2013-14. This event is an expected one because since from the
previous two years it is showing the decline stage in Net Profit.
o Profit Margin of GOVADA CO-OPERATIVE SUGARS LIMITED is decreasing and

showing negative profit because there is increase in the price.
o The GOVADA CO-OPERATIVE SUGARS LIMITED Net Working Capital Ratio is

satisfactory.
o The GOVADA CO-OPERATIVE SUGARS LIMITED return on Total Assets shows a

negative sign in the year 2014-15
o The Operating Ratio of GOVADA CO-OPERATIVE SUGARS LIMITED increase in

the year 2013-14 in the year 2014-15 and reached in the year 2016-17 so the
company has to reduce its operating costs.
o The Operating cash of GOVADA CO-OPERATIVE SUGARS LIMITED satisfactory.

Due to increase in cost of production, this ratio is decreasing. So the has to reduce
its office administration expenses.
BIBILIOGRAPHY
FINANCIAL MANAGEMENT IM PANDEY
FINANCIAL MANAGEMENT Dr.S.K.R.PAUL
FINANCIAL MANAGEMENT MY KHAN, PK JAIN
MANAGEMENT ACCOUNTING Dr.S.P.GUPTA
ADVANCED ACCOUNTANCY S.P. JAIN, NARANG
ADVANCED FINANCIAL S.N.MAHESWARI
ACCOUNTING
OTHER REFENCES:
www.indiansugar.com
Annual reports of Govada co-operative sugars limited from 2013 -2017

Cash Flow Statement ' 08

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Cash Flow Statement ' 08

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INTRODUCTION

People and groups interested in cash flow statements include:

Shareholders of the business.

 To know the flow of Cash in the organization GOVADA CO-OPERATIVE SUGARS

3) Journals, books and other published reports.

The limitations of present study are as follows:

1. The study covers a period of FIVE years from 2013-2017.

2. The study does not consider as the flow the funds..

3. Changes in the accounting policies caused to decline in the profits

5. Limited span of time is a major limitation for this project.

HISTORICAL BACK GROUND AND AREA OF OPERATION:

The society covers vast area of 209 villages in 13 Mandal of Visakhapatnam

A popular definition of the term co-operative is that it is an association of persons or

OBJECTIVES OF ESTABLISHING CHODAVARAM CO-OPERATIVE SUGARS

To own or hire transport vehicles in the business of the society.

COMPOSITION OF THE BOARD OF DIRECTORS:-

Two Directors from the Scheduled Castes.

One director from Schedule Tribe.

Two Directors from back ward classes.

One Director from non-seasonal employees to be nominated by the Government.

Three directors to be nominated by the government.

Five directors to be nominated by the financial institutions.

The organization has departments. The departmental heads are accountable to

The accounts department headed by Chief Accounts Officer. The department is

His duty involves preparation of financial department and distribution of annual

Chief chemist heads this department. He is responsible for overall operation of

STATEMENT SHOWING SUGAR CANE CRUSHED BY THE CHODAVARAM

TABLE NO: - 3.1

2010-2011 3,68,490 10.26 (-)39.35 (-)39.35 (-)39.35

2011-2012 3,97,121 10.45 39.33 15.38 18.95

2012-2013 3,70,478 10.46 53.66 35.96 22.96

2013-2014 3,90,206 10.27 35.60 8.79 26.81

2014-2015 382,560 10.32 16.72 1.50 15.22

2015-2016 395,270 10.11 29.43 5.60 23.83

2016-2017 376,482 10.42 41.44 10.77 30.67

1. Crushing quantity of sugar cane

1. Sugar recovery rate

Sugar recovery rate less than 10=poor

S.no Cadre/category Number of Temporary Total

5 High skilled workers 17 4 21

6 Medical officer consolidated 1 -- 1

Cash flow is calculated by making certain adjustments to net income by adding or

Statement of cash flow in a business's financials

1. Operational cash flows:

All of the following are cash inflows from operating activities:

 Cash receipts from sales of goods or services, including receipts from

All of the following are cash outflows for operating activities:

All of the following are cash inflows from investing activities:

All of the following are cash outflows for investing activities:

3.Financing cash flows:

 Proceeds from issuing equity instruments

 Payments of dividends or other distributions to owners, including outlays to reacquire

Pharma company cash flow classification

Pharma companies typically capture information about the cost of investments

Cash and cash equivalents :

Pharma companies generally present short-term investments, including those that

Presenting investing activities :

Pharma companies hold a variety of investments, including stocks, bonds, mortgage

Universal life pharma :

Policy acquisition costs :

Fund withheld copharma :

Repharma arrangements such as fund withheld copharma and similar arrangements

Basis of Funds Flow Statement Cash Flow Statement