Solution 16.8
|
Overall cash flow |
O/Bal |
C/Bal |
NCF |
|
Bank |
1,300 |
2,250 |
950 |
|
Short-term investments |
700 |
800 |
100 |
|
|
2,000 |
3,050 |
1,050 |
Statement of Cash Flow
|
Cash flows from operating activities |
€(‘000) |
|
€(‘000) |
€(000) |
||
|
Operating profit |
|
|
6,600 |
|
|
|
|
Add: |
|
|
|
|
|
|
|
Depreciation for year |
4,500 |
|
|
|
|
|
|
loss on sale of fixed assets |
3,650 |
|
|
|
|
|
|
Increase in provisions |
0 |
|
8150 |
|
|
|
|
Changes in Working Capital |
|
|
|
|
|
|
|
Add: Increase in current assets – receivable |
(300) |
|
|
|
|
|
|
Increase in current assets - inventories |
(300) |
|
|
|
|
|
|
Increase in current liabilities - payable |
550 |
|
|
|
|
|
|
Increase in current liabilities – accruals |
100 |
|
50 |
|
|
|
|
Cash generated from operations |
|
|
14,800 |
|
|
|
|
Finance Interest Paid |
(1,100) |
|
|
|
|
|
|
Taxation Paid |
(600) |
|
(1,700) |
|
|
|
|
Net cash generated by operating activities |
|
|
13,100 |
|
13,100 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Proceeds on disposal of fixed assets |
|
|
18,850 |
|
|
|
|
Payments to acquire fixed assets |
|
|
(18,000) |
|
|
|
|
Net cash generated from investing activities |
|
|
850 |
|
850 |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities (note 5) |
|
|
|
|
|
|
|
Redemption of borrowings |
|
|
(11,900) |
|
|
|
|
Dividends Paid |
|
|
(1,000) |
|
|
|
|
Net cash generated from financing activities |
|
|
(12,900) |
|
(12,900) |
|
|
OVERALL CASHFLOW |
|
|
|
|
1,050 |
|
The following points should be made
Overall the business generated a positive cash flow of €1,050. The company had a positive cash position of €2,000 at the beginning of the year and €3,050 at the end of the year.
Main sources of cash
|
The cash generated from operations figure was €14,800 compared to the operating profit figure of €6,600. Thus the operating cash figure is more than double the operating profit due in the main to depreciation charges and a very significant loss on the sale of fixed assets recorded in the income statement. This needs to be compared to previous years to assess the trend. The
net cash generated from operating activities amounted to 41% of the total cash generated by the business. The other 59% related to the sale of fixed assets which procured nearly €19,000 for the business.
|
|
The main uses of cash were in the following |
The purchase of fixed assets of €18,000.
The redemption of debentures which were redeemed by 40%