Interview
Cash Flow Statement Notes
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Cash Flow statement notes
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Followsarahaesthetics
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Notes to Cash flow.
1. Reconciliation btw profit BEFORE tax & cash generated from operations:
Net profit before tax (find in income statement) Net profit
Retained
is also
might need to use Income ledger
Adjustment:
Depreciation add back depcreiation bc non cash
Depreciation
Interest Expense Has place on the CF Interest expense
= Operating Profit before changes in working capital
Changes in working capital:
Receivables: stock (found in balance sheet or notes)(under current assets - “Trade & other receivables”)
.
: look if debtors went up or down in the amount (accrued income; prepaid expense; trade debtors; deposit & SARS VAT &
: state “increase” or “decrease”
: state amount it increased/decreased by
: receivables increase = (outflow) of money & receivables decrease = inflow of money bc debtors paying us
Inventory: selling causes inventory to go down
: get inflow of money for selling stock
: inventory decrease = sold stock & got money therefore inflow of money
: inventory increase = bought stock & lost money therefore (outflow)
Payables: creditors people we buy on credit from
: balance sheet under “Trade & other payables” but if given in notes as well look at notes
- Trade creditors/Creditors control & SARS VAT & deferred income & Accrued expense & income in advance & everything in payable except be
- SARS (Income Tax)
- Shareholders for dividends
- Accrued expenses(interest on loan)
* when comparing payables do not consider SARS (Income Tax); Shareholders for dividends; Accrued expenses(interest on loan) as the
a space on cash flow statement; consider everything else
: if increase in creditor = bought more on credit therefore not really spending money
: if decrease payables = we paid our creditors therefore losing money therefore (outflow)
= changes in working capital
Cash generated from operations(operating + changes) h
Cash flow statement: (OIF)
Cash flows from operating activities
Cash generated from operations 1 amount from statement
-
t
Interest paid interest expense
↳ but
= interest we must
pay : put x
ie .
Interest
expense
+
Expenses
( brackets )
on
payable Interest on last
year
Interest of this
yr
if seen in notes could also be acned expense (still owe )
Dividends paid 2 -
C ) .
Income tax i.
Taxation paid/Income Tax 3 C 7
Cash generated from investing activities =
all amounts
- purchase of fixed assets (LVE)
&
(Go in brackets bc spending money )
to L B
Dgo
→ will
only
t be business bought
- sale of assets •
always at book value cost -
Acc .
dep
- fixed deposit (t in fixed deposit = outflow of money
(.± of fixed deposit = inflow of money bc getting money back
- investment of shares
I> how do source
you money
Cash flow from financing activities:
"
for "
capital
→ look share
=
all amounts added
Sale of shares - if shares went up means sold
☐
get from
ordinary share capital
↳ or proceeds
Loan (balance sheet/notes) If increaSe then no brackets
" "
Buy back of shares repayment
• can have loan
.
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