Activity 13.

2 Cash flow statement

Source 13.15 Cash flow statement for Hazy Ski Hire Pty Ltd for the six months ending 31 December 2016

$ $ $ $ $ $
Opening Cash 350 6100 2650 8500 (4600) (2600)
Balance
Inflows
Sales Receipts 12400 11200 10100 9500 9600 7800
Interest 300 300 300 200 200 100
Dividends - - 2400 - - -

Total Cash Inflows 12700 11500 12800 9700 9800 7900

Outflows
Wages 2400 2400 2400 3100 3100 3100
Rent 4000 4000 4000 4000 4000 3000
Insurance - 8000 - - - -
Electricity 400 400 400 400 400 400
Telephone 150 150 150 300 300 300
Asset Purchase - - - 15000 - -

Total Cash Outflows 6950 14950 6950 22800 7800 6800

Closing Cash 6100 2650 8500 (4600) (2600) (1500)
Balance

Complete the following questions using the information provided in the cash flow statement for Hazy
Ski Hire Pty Ltd.
1. What was the balance in the business's bank at the beginning of the cash flow statement period?
$350

2. How much cash flowed into the business in the fourth month?
$9,700

3. Identify the main reason the business went into negative bank balances.
High cash outflow

4. What source of finance would have been most appropriate for this business starting in month 4?

5. How much cash did the business have in its account at the end of the cash flow statement period?
-$1,500

6. In which month did the business have the highest level of cash inflow?
$12,800 third month

7. In which month did the business have its largest outflow of cash?
$22,800

8. Can you suggest changes in cash outflow that the business could reorganise to solve its cash flow
problems and ensure that its account did not go into a negative balance?
Spent too much on their assets so they went into the negatives so they could rent their assets instead of buying
them.

9. Can you suggest a reason why its cash sales receipts have decreased over this time period