MAIN FINANCIAL STATEMENTS

INCOME STATEMENT ACCRUAL ACCOUNTING

REVENUE REPORTED WHEN EARNED
-EXPENSES REPORTED WHEN INCURRED

PROFIT/ LOSS
Profit growing
so fast. How
come we are
running out of
cash?
 Example

The company has 30 days to repay a debt of 5,00,000. Two clients

are not making their due payments of 7,50,000. The company has
3,00,000 in its bank account to make payment.

Profitable Business but Liquidity issues

Objectives of Cash Flow Statement
 Cash from different Activities

Short – Term Planning

Helps to understand Liquidity

Objectives of
Cash Flow Efficient Cash Management

Statement Prediction of Sickness

Comparison with Budget

Cash Position
CASH OUTFLOW
Where from: Where to?
 Classification of
Cash Inflows and Outflows
Operating activities
It includes receiving cash from customers for the sale of goods and
services, receiving interest and dividends on loans and investments,
and making cash payments for wages, goods and services purchased,
interest, and taxes.

Operating Activities

Cash Inflow Cash Outflow

1) Cash Sales 1)Cash Purchases

2) Received 2)Payment to
from Debtor Creditors
3) Commission 3)Cash Operating
& Fees Expenses
4) Royalty 4)Payment of
Wages
5)Income Tax
Cash effects the transaction on Net Income
6)Manufacturing
Expenses
Investing activities
It includes purchasing and selling long-term assets and marketable
securities (other than cash equivalents), as well as making and
collecting on loans.

Investing Activities

Cash Inflow Cash Outflow

1) Sale of Fixed
Assets 1)Purchase of
2) Sale of Fixed Assets
investments 2)Purchase of
3) Interest Received Investments
4) Dividend Received 3)Working Capital
5) Working Capital
Recovery
Financing activities
It includes issuing and buying back capital stock, as well as borrowing
and repaying loans on a short- or long-term basis (issuing bonds and
notes). Dividends paid are also included in this category.

Financing Activities

Cash Inflow Cash Outflow

1)Redemption of
1)Issue of Shares Preference
in Cash Shares
2)Issue of 2)Payment of
Debentures in Dividends
Cash 3)Interest Paid
3)Proceeds from 4)Repayment of
long-term Finance/ Lease
borrowings LiabilityPayment
of Loans
Decrease hjjk,..kj.,.j
https://www.infosys.com/investors/reports-filings/
quarterly-results/2019-2020/q4/documents/standalone/
sa-fy20-q4-and-12m-finstatement.pdf

https://www.suzlon.com/pdf/Annual-
Report-FY20.pdf
CASH FLOW FROM OPERATIONS
Decrease hjjk,..kj.,.j
Calculation of Cash From Operating Activities (Under Indirect Method)

Net Income
Adjustment for Operating Activities

ADD- Depreciation/ Amortization Expenses INCOME

STATEMENT
ADD- Loss on Sale of Assets

Less- Gain on sale of Assets

- Increase in Current Assets other than Cash

+ Decrease in Current Assets other than cash

BALANCE
+ Increase in Current Liabilities SHEET

- Decrease in Current Liabilities

Net Cash Provided by Operating Activities

 Working Capital Changes

BALANCE SHEET

CURRENT ASSETS & CURRENT LIABILTIES 2012 2011 IMPACT ON CASH BALANCE

INVENTORY 150 100 MEANS NEGATIVE IMPACT

ACCOUNTS RECEIVABLES 200 250 MEANS POSITIVE IMPACT

ACCOUNTS PAYABLE 50 100 MEANS NEGATIVE IMPACT(WE

ARE WORKING WITH THEIR
MONEY)

SHORT TERM LOAN 175 125 MEANS POSITIVE IMPACT

The Balance Sheets of XYZ Ltd.for two years are given below-

Assets 2012 2011

Cash Balance 60,000 50,000
Trade Debtors 1,00,000 75,000
Inventory 1,20,000 1,40,000
Land 80,000 1,00,000
Plant & Machinery 2,50,000 2,00,000
Total 6,10,000 5,65,000
Liabilities & Capital
Trade Creditors 40,000 30,000
Debentures 90,000 1,50,000
Prov. For Depreciation on Plant 80,000 60,000
Equity Share Capital 2,40,000 2,00,000
General Reserve 1,60,000 1,25,000
Total 6,10,000 5,65,000

Cash Dividend of Rs. 25,000 has been paid during the year.