Cash flows statement is prepared to measure the cash in-flows and cash out-flows from the operating, investing and financing activities of a business during a period. Cash inflows usually arise from one of three activities – financing, operations or investing. The money coming into the business is called cash inflow, and money going out from the business is called cash outflow. This holds true for both business and personal finance.
Cash flow statement has three activities – • Operations activity
• Investing activity
• Financing activity
Types of cash flow statement
• Indirect method
• Direct method
Operating activitiesFollowing items are included in cash flow from operating activity:
• first of all profit is written as per balance sheet or capital reserve xyz
Non-operating expenses:
• loss on sale of fixed assets xyz
• goodwill written off xyz
•
Transfer to general reserves xyz
• depreciation on fixed assets like plant and machinery, land, building xyz
• dividend paid or received which is shown in adjustment xyz
• provision of income tax xyz
• stock dividend xyz
• discount writtenoff xyz
• patents w/o xyz
• debenture premium xyz
• provision of depreciation xyz
• profit on investment xyz
Non-operating incomes:
• profit on sale of fixed assets ( xyz)
Working capital:
Add:
Decrease in current assets xyz
Increased in current liabilities xyz
Less:
Increased in current assets ( xyz)
Decrease in current liabilities ( xyz)
(-) income tax ( xyz)
Company Name, ABC
Cash Flow Statement
For the Year Ended march 31, 2011
Cash Flows from Operating Activities:
Operating Income (EBIT) $ 489,000
Depreciation Expense 112,400
Loss on Sale of Equipment 7,300
Gain on Sale of Land (51,000)
Increase in Accounts Receivable (84,664)
Decrease in Prepaid Expenses 8,000
Decrease in Accounts Payable (97,370)
Decrease in Accrued Expenses (113,860)
Net Cash Flow from Operating Activities $ 269,806
Investing activity:
Purchase of fixed assets ( xyz)
Sale of fixed assets xyz
Dividend received xyz
Cash flow from/used in investing activity xyz
Company Name, ABC
Cash Flow Statement
For the Year Ended march 31, 2011
Cash Flows from Investing Activities:
Sale of Equipment $ 89,000
Sale of Land 247,000
Purchase of Equipment (100,000)
Net Cash Flow from Investing Activities $ 136,000
Financing activities
• Proceeds from issuing short-term or long-term debt
• Payments of dividends
• Payments for repurchase of company shares
• Repayment of debt principal, including capital leases
Company Name, ABC
Cash Flow Statement
For the Year Ended march 31, 2011
Cash Flows from Financing Activities:
Payment of Dividends $ (90,000)
Payment of Bond Payable (200,000)
Net Cash Flow from Financing Activities $(290,000)
Net Change in Cash $ 115,806
Beginning Cash Balance 319,730
Ending Cash Balance $ 435,536
