Solution 16.5
Note: The dividends figure on the income statement for 2013 should read €1,100 (not €800)
|
Overall cash flow |
O/Bal |
C/Bal |
NCF |
|
|
€’000 |
€’000 |
€’000 |
|
Bank |
220 |
0 |
(220) |
|
Short-term investments |
75 |
50 |
(25) |
|
bank loans and overdrafts |
(10) |
(110) |
(100) |
|
|
285 |
(60) |
(345) |
Statement of Cash Flow
|
Cash flows from operating activities |
€(‘000) |
|
€(‘000) |
€(000) |
||
|
Operating profit |
|
|
3,654 |
|
|
|
|
Add: |
|
|
|
|
|
|
|
Depreciation for year |
890 |
|
|
|
|
|
|
Loss on sale of fixed assets |
120 |
|
|
|
|
|
|
Increase in provisions |
0 |
|
1,010 |
|
|
|
|
Changes in Working Capital |
|
|
|
|
|
|
|
Add: Decrease in current assets – receivable |
20 |
|
|
|
|
|
|
Less: Increase in current assets – inventories |
(2) |
|
|
|
|
|
|
Increase in current liabilities- accruals |
95 |
|
|
|
|
|
|
Increase in current assets - prepayments |
(2) |
|
|
|
|
|
|
Increase in current liabilities – payables |
120 |
|
231 |
|
|
|
|
Cash generated from operations |
|
|
4,895 |
|
|
|
|
Finance Interest Paid |
(560) |
|
|
|
|
|
|
Taxation Paid |
(490) |
|
(1,050) |
|
|
|
|
Net cash generated by operating activities |
|
|
3,845 |
|
3,845 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Proceeds on disposal of fixed assets |
|
|
200 |
|
|
|
|
Payments to acquire fixed assets |
|
|
(3,183) |
|
|
|
|
Net cash generated from investing activities |
|
|
(2,983) |
|
(2,983) |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities (note 5) |
|
|
|
|
|
|
|
Proceeds from borrowings |
|
|
0 |
|
|
|
|
Repayment of borrowings |
|
|
(1,173) |
|
|
|
|
Proceeds from issue of equity shares |
|
|
1,066 |
|
|
|
|
Dividends Paid |
|
|
(1,100) |
|
|
|
|
Net cash generated from financing activities |
|
|
(1,207) |
|
(1,207) |
|
|
OVERALL CASHFLOW |
|
|
|
|
(345) |
|
The following points should be made
Overall a negative cash flow of €345,000. The business started the year with a positive cash balance of €285,000 and ended the year with a negative balance of €60,000.
The main sources of cash were
|
|
Operating activities – The cash generated from operations was €4895 compared to the operating profit figure of €3,654. Thus the operating cash to operating profit ratio amounts to 134% mainly due to depreciation charges in the income statement. This needs to be compared to previous years to assess the trend. |
|
|
Net cash generated from operating activities accounted for 75% of the total cash generated |
|
2 |
Sale of Non-current assets |
|
3 |
bank overdraft |
Identify main uses of cash
|
1 |
Dividend payments |
|
2 |
Taxation |
|
3 |
Investment in non-current assets. This amounted to €3183 |
|
|
and accounted for a 9% increase in non-current assets. |
|
4 |
Some debentures and bank loans were redeemed with an overall reduction in |
|
|
Long-term debt of 15.6% |
Overall 75% of the company's cash requirement was financed through operating activities. The main item of expenditure was the investment in non-current assets which has partly financed through a share issue as well as cash generated from operating activities.