CASH FLOW STATEMENT

VIDEO 1

By Edutap - http://www.edutap.co.in/
Introduction

Sales in Cash 50,000

Sales on Credit 50,000

Total Sales 1,00,000

Expenses 50,000

Profit 50,000

Cash = zero
Cash Flow

Sales 1,00,000

Cost of Goods Sold 15000

Depreciation 5000
Operating Profit 80,000
Interest 50,000

Profit before Tax 30,000

Tax 9,000

PAT 21,000 Cash = 26,000

Balance Sheet Information
Last Year This Year

Trade Payables = 5,000 Trade Payables = 6,000

Increase in Cash 1000

Accounts Receivables = 5,000 Account Receivables = 4,000

Increase in Cash 1000

Inventory = 2,000 Inventory = 4,000 Decrease in Cash 2000

Outstanding Employee Salary = 6,000 Outstanding Employee Salary = 3,000

Decrease in Cash 3000
Cash = 10,000 Cash = ?

Net Decrease in Cash = 3000

Sales 1,00,000 Cash = 26,000

Cost of Goods Sold 15000

Depreciation 5000 Net Decrease in Cash = 3000

Operating Profit 80,000

Interest 50,000 Net Cash = 23000
Profit before Tax 30,000

Cash from Previous Year =10,000

Tax 9,000

PAT 21,000
Total Cash = 23000+10,000 = 33,000
 Concept Check

 Salaries of Employees
 Buying Raw material
 Buying Shares of another company
 Raising money by issuing shares of the company
 Interest received on Bonds bought by company of another company
 Interest given on Loan taken by the company
 Dividend received from investment on shares of another company
 Dividend given to shareholders of the company
 Principal payment on loan taken for buying Machinery
Cash Flow from Operating Activities
Cash Flow from Operating Activities
Cash Flow from Operating Activities

Interest from Investments in Bonds = 8000

Income Tax = 12000

Dividend given to Shareholders = 5000

Cash Flow from
Operating Activities

Interest from Investments in Bonds = 8000

Income Tax = 12000

Dividend given to Shareholders = 5000

Cash Flow

Sales 1,00,000

Cost of Goods Sold 15000

Depreciation 5000
Operating Profit 80,000
Interest 50,000

Profit before Tax 30,000

Tax 9,000

PAT 21,000 Cash = 26,000

Balance Sheet Information
Last Year This Year

Trade Payables = 5,000 Trade Payables = 6,000

Increase in Cash 1000

Accounts Receivables = 5,000 Account Receivables = 4,000

Increase in Cash 1000

Inventory = 2,000 Inventory = 4,000 Decrease in Cash 2000

Outstanding Employee Salary = 6,000 Outstanding Employee Salary = 3,000

Decrease in Cash 3000
Cash = 10,000 Cash = ?

Net Decrease in Cash = 3000

Sales 1,00,000 Cash = 26,000

Cost of Goods Sold 15000

Depreciation 5000 Net Decrease in Cash = 3000

Operating Profit 80,000

Interest 50,000 Net Cash = 23000
Profit before Tax 30,000

Cash from Previous Year =10,000

Tax 9,000

PAT 21,000
Total Cash = 23000+10,000 = 33,000
Cash Flow

Sales 1,00,000

Cost of Goods Sold 15000 Cash = 26000

Depreciation 5000
Operating Profit 80,000
Interest 50,000 Cash = 76000
Profit before Tax 30,000

Tax 9,000

PAT 21,000
Balance Sheet Information
Last Year This Year

Trade Payables = 5,000 Trade Payables = 6,000

Increase in Cash 1000

Accounts Receivables = 5,000 Account Receivables = 4,000

Increase in Cash 1000

Inventory = 2,000 Inventory = 4,000 Decrease in Cash 2000

Outstanding Employee Salary = 6,000 Outstanding Employee Salary = 3,000

Decrease in Cash 3000
Cash = 10,000 Cash = ?

Net Decrease in Cash = 3000

Cash Flow

Sales 1,00,000

Cost of Goods Sold 15000 Cash = 26000

Depreciation 5000
Operating Profit 80,000
Interest 50,000 Cash = 76000
Profit before Tax 30,000

Tax 9,000

Cash form Operating = 76000 -3000 = 73000

PAT 21,000
Cash Flow

Sales 1,00,000

Cost of Goods Sold 15000 Cash from financing activity= -50000

Depreciation 5000
Operating Profit 80,000
Interest 50,000
Net Cash = 73000 – 50000 =
Profit before Tax 30,000 23000

Tax 9,000

PAT 21,000
Cash Flow form Investing Activities
Cash Flow from Financing Activities
Revenues 125000
Operating Expenses 85000 PBT = 30,000
Operating Profit 40,000
Cash including Dep = 39,000
Depreciation 9000
Interest Less Interest (Net Cash flow 1000 Cash including Interest addition = 40000
from Financing)= 55000
PBT 30,000 Cash from Operating Activity
Income Tax 6000 = 9000

Net Profit 24000 Net Cash from Operating=

Dividend Less Dividend= 56000 4000 3000

Last Year This Year

Cash =0 Cash = ?
Accounts Receivable = 0 Accounts Receivable = 36000 Decrease = 36,000

Accounts Payable = 0 Accounts Payable = 5000 Increase = 5,000

Cash from Equity= 60,000
Equity = 0 Equity = 60,000
Retained Earnings = 0 Retained Earnings =20,000
Machinery = 0 Machinery =10,000 Net Cash Flow from Investment =
-10,000
Thanks