a) Cash management

b) Operating
c) not included non cash
d) Operating
e) Operating
f) Operating
g) Cash management
h) not included
i) Investing hire - payment in installments, only on last installment payment you become the ow
j) Financing
k) not included non cash
l) not included non cash
m) Operating
nt payment you become the owner
a) Operating
b) Financing
c) Investing
d) Investing copy rights purchased
e) non cash
f) Financing
g) non cash
h) Operating
i) Investing
j) cash management
k) Investing
l) cash management
m) Investing
n) operating ?? Net profit
o) Investing
p) non cash only entered into agreement
q) investing
r) Financing
s) Operating
t) Operating Patent
u) Operating
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)
n)
o)
p)
q)
r)
s)
t)
u)
copy rights purchased ask doubt

?? Net profit

only entered into agreement

ask doubt
operating
operating
non cash its just entered to hire purchase not paid
operating
Financing
Financing
cash mangement
Investing
non cash
Investing
Investing
non cash
cash management
Investing
non cash
Financing
non cash
Operating
Financing
Investing
Investing
 Cash Flows from Investing Activities

1) Purchased Investments -6500

Sold Investments 3400
Purchased Plant -15800
Building constructed -7800
Sale of Plant 5200
-21500

2) Cash Flow from Financing activities

Divident Paid -1200

Redeemed debentures -4700
Repaid Bank OD -2100
Issued conertible debentures 17000
9000
 Cash Flow from operating activities

Net profit before Tax

Adjustments
Non Cash Items Non Operating Items
Add Depreciation less gain on sale of PPE/investmgoes to investing
Add Bad debts less Interest Income goes to financing

add loss on sale of PPE/investments

add interest paid
goes to financing
operating activities Sales Revenue cash
credit
Profit on sale of machinery
Interest Income

Working Capital changes

Add decrease in current assets inflow of cash
less increase in current assets outflow of cash Expenses
Salaries & wages
Add increase in CL inflow of cash Dividents
less decrease in CL outflow of cash Income Tax
Interest paid
Rent paid
Depreciation
Loss on Sale of machinery
Bad debts
Working Capital = Current assets-current Liabilities

Current assets Current Liabilities

A/R A/P
Inventory
Prepaid Exp
Indirect Medthod
Cash Flows from Operating activities

Net Profit before tax 17200

Non Cash Items

Depreciation 6700
Bad debts 1500

Non Operating Items

Gain on sale of investments -1200
Interest Income -900 trade receivable 6600
Divident Income -300 Cr Losses 1600
Interst expense 1100 Gross T/R 8200
Loss on sale of plant 800 Inc in T/R
Add Written off
Working Capital Changes
increase in inventory -1400
increase in T/R -2800
Increase in prepaid expenses -300 Income tax opening bal
decrease in trade payables -6700 Tax expense
Total tax Amount for the year
NP before adjusting Income tax 13700 Less : tax payable
Less Tax expense -9000 Tax Paid in Cash

Cash From operating activities 4700

 5300
800
6100
2100
700
2800

2800
8300
11100
-2100
9000
 Cash Flows from Operating activities

Net Profit before tax 13000

Non Cash Items

Depreciation 3100
Bad debts 1500

Non Operating Items

Interest Expense 2700

Working Capital Changes

Increase in Inventory -2900
Increase in T/R -900
decrease in prepaid expense 800
Decrease in trade payables -5100

NP before adjusting tax 12200

less tax expense 5200
Cash from operations 7000
 Trade receivables
Year 2025 2024
8300 8900
1400 300
9700 9200

Increasing Difference 500

add back bad debts 400
900

Income tax payable

Opening Blance 3300
Tax expense 6700
Total tax amount 10000
Less tax payable 4800
Tax paid in Cash 5200
 Cash Flows from Operating activities

Net Profit before tax 1500

Non Cash Items add bad debts

Depreciation 4800
Bad debts 400

Non Operating Items

Interest Income -400 opening bal
Finance costs 600 Tax exp
Gain on sale of investments -100 payable tax increase
Loss on sale of equipment 200 Tax paid in cash

Working Capital Changes

Inventories decreased 900
T/R increased -1400
trade payables decreased -700

NP before before adjusting tax 5800

Less Tax 500
Cash from operating activities 5300
Trade receivables
1200
200
1400

- because when tax payable increase, it means we have not yet paid the amount, so decrease that
800
300
500
aid the amount, so decrease that cash to already existing expense
clf fee op exp O/s Exp

10000
70000
80000

80000 70000 10000

Instructor Treadmill Rent deposRent exp reg. exp Cash Capital Loan equity Drawing
800000 800000
100000 100000
10000 -10000
144000 -144000
24000 -24000
300000 -300000
250000 250000
40000 -40000
10000
-70000
80000

40000 300000 24000 144000 10000 562000 800000 100000 260000 80000

1240000 1240000
 Cash Flows from Operating activities Trade receivables decrease

Net Profit before tax 6500 less bad debts

decrease
Non Cash Items
Depreciation 9500
Bad debts 700 Tax Expense
Tax payable decrease
Non Operating Items
Divident Income -300
Interest Income -200
Gain on disposal of plant -800
Finance cost 900
Loass on sale of investments 300

Working Capital changes

Inventory increase -1500
T/R decrease 2000
T/P decrease -1600

NP before tax 15500

less tax 3300
Cash flow from operating activities 12200
de receivables decrease
2300
300
2000

2800 because when tax payable decrease, it means we paid inorder for it to decrease, so add that cas
500
3300
or it to decrease, so add that cash to already existing expense as its csh outflow
 Incr Trade re 2023 2022
19900 10700
add 1700 1100
21600 11800

9800
don’t consider
investments add bad debts 1400
11200

Opening tax 4100

tax expense 2200
6300
payable 2300
Tax paid 4000
Cash Flows from Operating activities

Net Profit before tax 14000

Non cash Items

Depreciation on CGS 3800
Bad debts 2000

Non Operating Items

Divident Income -2000

Interest Income -5400
Gain on sale of land -6300
Interest exp 5700
Loss on sale of plant 3800

Working Capital Changes

Increase in inventory -7200
T/R -11200
prepaid exp decrease 300
decrease in trade payables -18000

N/P before tax -20500

Tax paid 4000

Cash from operating activities -24500

Cash flow from investing activities

Purchase of machinery -5300

Sale of plant 1900 note - depreciation on plant machinery, profit or loss on s
Sale of land 13300
Divident Income 2000
Interest Income 5400

Cash from investing activities 17300

Cash Flow from financing activities

Paid dividents -6500

Issued debentures 5400
Issues Equity shares 9000
Interst expense -5700

Cash from financing activities 2200

Net decrease in Cash flow -5000

Cash at the beginning 13300
Cash at the end 8300

Interpretation

11800 is the profit after tax. But at the same time cash balance at the end is reduced to 8300 from cash at beginning - i.e.,
Reasons:
Net profit of the company is having more of accruals and credit sales.
Increase in TR and Inventory being the major reason for cash deficit despite net profit.
It used more cash in its operations than it received.
However the strenth identifies is that the company is able to meet its financial needs by raising finance through equity and
Also is it responsible to its shareholders which is evident from its prompt divident payment

The finance raised by the company may be utilised by it in paying off the creditors or purchasing machinery.
achinery, profit or loss on sale of them already considered in operating so only the sale amount will be considered in investing activities
m cash at beginning - i.e., 13300.

finance through equity and debentures.

machinery.
dered in investing activities
Cash Flows from Operating activities

Net Profit before tax -15600

Non Cash expenses

Depreciation on CGS 4500

Non Operating activities

Gain on sale of investments -300
Divident Income -900
Interest Income -100
Loss on sale of plant 1100
Interest expense 4300

Working Capital changes

Increase in inventory -500
Incr in TR -2800
decr in prepaid exp 700
Incr in TP 3200

Net Profit before tax -6400

less Tax paid 700

Cash flow from operations -7100

Cash Flows from Investing activities

Purchased machinery -3300
Sale of plant 300
Sold investments 5400
Divident Income 900
Interest Income 100

Cash flow from investing activities 3400

Cash Flows from financing activities

Raised Loan 9000
Issued equity shares 2000
Issued debentures 5200
Redeemed debentures -400
Interest Expense -4300

Cash flow from Financing activities 11500

Net Increase in Cash flow 7800
Cash and Cash equivalents at beginning 6900

Cash at the end 14700

Interpretation

Since we had a net loss after tax, of Rs 15600, we can see an increase
in the inflow of cash mainly because the company is seen to be
promptly raising finance through equity, loans and debentures. The
company may have used this finance raised for the purpose of
purchasing machinery, purchase of inventory or for the purpose of
redeeming debentures or paying off interest expense. Also, since
there is no profit there is no divident paid to the shareholders.
 Tax calculation
Opening Balance 800
Tax liability at end 100
Tax paid 700
Cash Flows from Operating activities

Net Profit before tax 4800

Non Cash Items

Bad debts 3200
Depreciation in CGS 6100

Non operating Items

Divident Income -1800
Interst income -1200
Gain on sale of plant -2300
Finance cost 2200
Loss on sale of investments 1400

Working Capital changes

Increase in inventory -4900
Increase in TR -8700
Prepaid expenses increase -900
TP increase 5500

NP before tax 3400

less tax paid 2900

Cash flow from operating activities 500

Cash Flows from Investing activities

Machinery Purchase -19900
Sale of plant 5000
Investment purchase -1900
Investment sale 9600
Divident Income 1800
Interest Income 1200

Cash flow from investing activities -4200

Cash Flows from Financing activities

Debenture redemption -4700
Issue of equity shares 8000
Finance cost -2200

Cash flow from Finance activities 1100

Net decrease in cash flow -2600

Cash & Cash equivalents at beginning of year 3800
Cash at the end 1200
 TR
Year 2025 2024
9800 4300
add cr loss 2900 1800
12700 6100
Increase 6600
bad debts 2100
8700

Tax
Opening Bal 1900
Tax expense for year 1900
3800
closing tax balance 900
2900
addl info - trade receivables written off - 4000
 TR
Year 2024 2023
20900 15600
add cr losses 8000 12000
28900 27600
1300
bad debts written off 4000
increase in TR 5300

Tax
Opening balance 700
CY tax expense 6700
7400
Closing balance 600
Tax paid in cash 6800
Cash Flows from Operating activities

Net Profit before tax 14400

Non Cash Items

Depreciation 7600

Non Operating Items

Interest Income -800
Gain on sale of investments -400
Finance costs 1800
Loss on disposal of patents 900

Working Capital Changes

Increase in inventory -5700
Increase in TR -5300
decrease in prep expenses 200
Increase in TP 1800

adjusted NP before tax 14500

Tax Paid 6800

Cash flow from operating activities 7700

Cash Flows from Investing activities

Sale of investments 4200 note
Eqipment disposal 4100
Equipment purchase -18700
Investment Purchase -2300
Patent disposal 400
Interest Income 800

Cash flow from Investing activities -11500

Cash Flows from Financing activities

Paid dividents -4500
Share issue at par 7500
Finance cost -1800

Cash flow from Financing activities 1200

Net decrease in Cash flow -2600

Cash & Cash equivalents at beginning of year 7000
Cash at the end 4400
Cash Flows from Operating activities Tax paid

Net Profit before tax 99500 Opening balance 5000

Tax expense 42000
Non Cash Items Total tax liability 47000
Depreciation 9000 less: Tax payable 4000
ammortization of patents 1000 Tax paid 43000
Non Operating Items
gain on sale of plant -800 20x7 20x6
Finance costs 2000 T/r 95425 54000
Increase in t/r -41425

Working Capital Changes

Inventory -68000
trade receivables -41425
prepaid expenses 6900
trade payables -6000

adjusted NP before tax 2175

Tax Paid -43000

Cash flow from operating activities -40825 Lost cash from operation: Excess inventories

Cash Flows from Investing activities

Sale of plant 2100

Cash flow from Investing activities 2100

Cash Flows from Financing activities

Finance cost -2000
loan repayment -2000
issue of equity shares 3000
payment of divident -31275 Borrowed cash from debentures and paid dividends: bad financial mana
issue of debentures 49000 Huge amt of debt: Debt to equity is too much

Cash flow from Financing activities 16725

Net decrease in Cash flow -22000

Cash & cash equivalents 29000

Cash at the end 7000

dividends: bad financial management
Pre Expansion
Earnings per share EPS: NP/No of eq shares
137340/7500= 18.312

Return on Equity: Profit / Avg Equity

137340/75000= 1.83

Net Profit margin: Net Profit/ Total Revenue

137340/800000= 0.17

Post Expansion:
Earnings per share EPS: NP/No of equity shares
93000/7500= 12.4

Return on Equity: Profit / Avg Equity

93000/75000= 1.24

Net Profit margin: Net Profit/ Total Revenue

93000/1300000= 0.106

Equity= 7500*10
No of eq shares

The company should not expand because the profit margins would reduce from 17% to 10.6% and its op
Looking at profit margins, the firm can choose to not expand its businesses.
/ Total Revenue

No of equity shares

/ Total Revenue
from 17% to 10.6% and its operational costs would also be more.