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CASH FLOW ANALYSIS

Q.1 The profit of Philips Ltd. After appropriations was Rs 2,50,000. The
profit was arrived at after taking into consideration the following items:
Sr.no. Particulars Amount
1. Depreciation on fixed tangible assets 20,000
(Machinery)
2. Loss on sale of fixed tangible assets (furniture) 2,000
3. Goodwill written off 9,000
4. Provision for taxation 35,000
5. Transfer to reserve 17,500
6. Gain on sale of fixed tangible asset (machinery) 8,000
Additional information:
Particulars 31.3.2018 31.3.2019
Trade receivables (all good) 50,000 62,000
Trade payables 45,000 55,000
Inventory 12,000 8,000
Income received in advance 8,000 -------
Outstanding expenses 6,000 3,000
Prepaid expenses ------- 5,000
You are required to calculate cash from operating activities.
Q.2 Charles ltd: made a profit of Rs 1,00,000 after charging depreciation
of Rs 20,000 on assets and a transfer to general reserve of Rs 30,000.
The goodwill written off was Rs 7,000 and the gain on sale of Machinery
was Rs 3,000. The other information available to you (changes in the
value of current assets and current liabilities) is as follows:
At the end of the year Trade receivables showed an increase of Rs
6,000; Trade payables an increase of Rs 10,000; prepaid expenses an
increase of Rs 200 and o/s expenses a decrease of Rs 2000. Ascertain
the cash flow from the operating activities.
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Q.3 The profit of Jova ltd. for the year ended 31-03-2019 after appropriations was Rs
250,000.
Additional information:
I. Depreciation of machinery 20000
II. Goodwill written off 9000
III. Loss on sale of furniture 2000
IV. Transfer to general reserve 22,500
The following was the position of its current assets and current liabilities as at 31-03-
2018 and 2019:
2018 2019
Income received in advance 8000 -
Inventory 12,000 8,000
Calculate the cash flow from operating activities.

Q.4 From the following Balance Sheet of DCX Ltd. And the additional
information as at 31st March, 2018 prepare a cash flow statement:
DCX Ltd
Particulars Note 31.3.2018 31.3.2017
no.
I. EQUITY AND LIABILITIES:
1. Shareholders fund:
a) Share capital 30,00,000 21,00,000
b) Reserve and surplus 1 4,00,000 5,00,000
2. Non-current liabilities:
Long term borrowings 2 8,00,000 5,00,000
3. Current liabilities:
a) Trade payables 1,50,000 1,00,000
b) Short term provisions 3 76,000 56,000
TOTAL 44,26,000 32,56,000
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II. ASSETS:
1. Non-current assets:
Fixed assets:
i. Tangible assets 4 27,00,000 20,00,000
ii. Intangible assets 8,00,000 7,00,000
2. Current assets:
a) Current investment 89000 78,000
b) Inventories 8,00,000 4,00,000
c) Cash and bank balance 37,000 78,000
TOTAL 44,26,000 32,56,000

Notes to accounts:
Note Particulars 31.3.2018 31.3.2017
no.
1. Reserve and surplus
(surplus i.e. balance in the
statement of P/L) 4,00,000 5,00,000
2. Long-term borrowings:
8% debentures 8,00,000 5,00,000
3. Short-term provisions:
Provision for tax 76,000 56,000
4. Tangible asset:
Machinery 33,00,000 25,00,000
Less: accumulated depreciation (6,00,000) (5,00,000)
Additional information:
1. During the year a machinery costing Rs 8,00,000 on which
accumulated depreciation was Rs 3,20,000 was sold for Rs
6,40,000.
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2. Debentures were issued on 1st April,2017.

Q.5 You are required to prepare a Cash-Flow Statement (as per AS-3) for the year
2017-18 from the following Balance Sheets:
Balance Sheets of Janaki India Ltd.
as at 31st March, 2018 and 31st March, 2017
Particulars Note 31.03.2018 31.03.2017
No. ₹ ₹
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital (Equity Share Capital) 3,00,000 2,00,000
(b) Reserves and Surplus (Statement of P/L) 1,20,000 70,000
2. Non-Current Liabilities
(a) Long Term Borrowings (8% Debentures) 1,50,000 1,20,000
3. Current Liabilities
(a) Short Term Borrowings (Bank Overdraft) 19,000 5,000
(b) Trade Payables (Creditors) 81,000 80,000
(c) Short Term Provisions 1 82,000 61,600
TOTAL 7,52,000 5,36,600
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets
Tangible 2 2,04,200 1,83,000
(b) Non-Current Investments 1,30,000 1,20,000
2. Current Assets
(a) Inventories 1,41,500 1,25,000
(b) Trade Receivables 64,600 64,500
(c) Cash and Bank Balances 2,11,700 44,100
TOTAL 7,52,000 5,36,600
Notes to Accounts:
Particulars 31.03.2018 ₹ 31.03.2017 ₹
1. Short term Provisions
Provision for Taxation 80,000 60,000
Provision for Doubtful Debts 2,000 1,600
82,000 61,600
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2. Fixed Assets (Tangible)

Plant and Machinery 2,43,000 2,23,000
Less: Accumulated Depreciation (38,800) (40,000)
2,04,200 1,83,000
Additional Information:
During the year 2017-18:
(i) A part of the machine was sold for ₹ 21,000 at a profit of ₹ 4,000.
(ii) The company charged ₹ 3,000 as depreciation on its Plant and Machinery. (iii)
New Debentures were issued on 31st March, 2018, at a discount of 10%.
(iv) Interest of ₹ 9,600 was paid on Debentures.
(v) Contingent Liability: 31.3.2018 31.3.2017
Proposed Dividend 25% 30%

Q.6 Following is the balance sheet of Akash Ltd. As at 31-3-2014:

Particulars Note 31.3.2014 31.3.2013
no.
I. EQUITY AND LIABILITIES:
1. Shareholders fund:
a) Share capital 15,00,000 14,00,000
b) Reserve and surplus 1 2,50,000 1,10,000
2. Non-current liabilities:
Long term borrowings 2,00,000 1,25,000
3. Current liabilities:
a) Short term borrowings 2 12,000 10,000
b) Trade payables 15,000 83,000
c) Short term provisions 3 18,000 11,000
TOTAL 19,95,000 17,39,000
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II. ASSETS:
1. Non-current assets:
Fixed assets:
1. Tangible assets 4 18,60,000 16,10,000
2. Intangible assets 5 50,000 30,000
2. Current assets:
a) Current investments 8,000 5,000
b) Inventories 37,000 59,000
c) Trade receivables 26,000 23,000
d) Cash and bank balance 14,000 12,000
TOTAL 19,95,000 17,39,000

Note Particulars 31.3.2014 31.3.2013

no.
1. Reserve and surplus
(surplus i.e. balance in the
statement of P/L) 2,50,000 1,10,000
2. Short-term borrowings:
Bank overdraft 12,000 10,000
3. Short-term provisions:
Provision for tax 18000 11000
4. Tangible asset:
Machinery 20,00,000 17,00,000
Less: accumulated depreciation (1,40,000) (90,000)
5. Intangible assets
Patents 50,000 30,000
Additional information:
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i. Tax paid during the year amounted to Rs 16,000.

ii. Machine with a net book value of Rs 10,000 (accumulated
depreciation Rs 40,000) was solved for Rs 2,000.
Prepare cash flow statement.
Q.7 There was Nil net cash flow from operating activities of Ashok ltd.
During the year ending 31st march, 2019. From the following Balance
sheet of Ashok ltd. As at 31st March 2019, prepare a cash flow
statement:
Ashok ltd
Particulars Note 31.3.2019 31.3.2018
no.
I. EQUITY AND LIABILITIES:
1. Shareholders fund:
a) Share capital 1900,000 11,00,000
b) Reserve and surplus 1 1,60,000 2,00,000
2. Non-current liabilities:
Long term borrowings 2 1,00,000 4,00,000
3. Current liabilities:
a) Short term borrowings 3 2,50,000 2,30,000
b) Short term provisions 4 1,90,000 2,70,000
TOTAL
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II. ASSETS:
1. Non-current assets:
I) Fixed assets:
A) Tangible assets 5 15,00,000 11,00,000
B) Intangible assets 6 2,80,000 1,70,000
II) Current assets:
a) Current investments 1,30,000 2,90,000
b) Trade receivables 3,90,000 4,10,000
c) Cash and bank balance 3,00,000 2,30,000
TOTAL 26,00,000 22,00,000

Note Particulars 31.3.2019 31.3.2018

no.
1. Reserve and surplus
(surplus i.e. balance in the
statement of P/L) 1,60,000 2,00,000
2. long-term borrowings:
8% debentures 100,000 400,000
3. Short-term provisions:
Bank overdraft 2,50,000 2,30,000
Provision for tax 1,90,000 2,70,000
4. Tangible asset:
Machinery 16,30,000 11,70,000
Less: accumulated depreciation (1,30,000) (70,000)
5. Intangible assets
Goodwill 2,80,000 1,70,000
Additional information:
i) A machinery of the book value of Rs 60,000, (depreciation
provided thereon Rs 20,000) was sold at a loss of Rs 6,000.
ii) 8% debentures were redeemed on 1st July, 2018.
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Q.8 From the following information, calculate cash flow from operating
activities:
Particulars 31.3.15 31.3.14
Surplus (balance in the statement of 71,000 89,000
P/L)
Inventory 12,000 4,000
Trade receivable 58000 45000
Outstanding expenses 14,600 10,000
Goodwill 57,000 27,000
Cash in hand 9000 12000
Machinery 82,000 56,000
i) A piece of machinery costing Rs 50,000 on which depreciation
of Rs 20,000 had been charged was old for Rs 10,000.
Depreciation charged during the year was Rs 18,000.
ii) Income tax Rs 23,000 was paid during the year.
iii) Interim dividend paid during the year was Rs 36,000.
Q.9 From the following Balance Sheets of Humility Ltd., prepare its Cash Flow
Statement for the year 2017-18 (as per AS-3):
Particulars Note 31.3.2018 31.3.2017
No. ₹ ₹
I. EQUITY AND LIABILITIES
(1) Shareholder's Funds:
(a) Share Capital 33,00,000 32,00,000
(b) Reserve & Surplus 1 5,00,000 4,00,000
(2) Non-Current Liabilities:
Long-term Borrowings 2 16,00,000 15,00,000
(3) Current Liabilities
(a) Trade Payables 3,20,000 5,13,000
(b) Short-term Provision (Provision for Tax) 30,000 27,000
TOTAL 57,50,000 56,40,000
II. ASSETS:
(1) Non-Current Assets:
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(a) Fixed Assets:

(i) Tangible 3 39,50,000 34,60,000
(ii) Intangible 4 50,000 40,000
(b) Non-current Investments 6,00,000 6,00,000
(2) Current Assets:
(a) Current Investments 5 10,000 30,000
(b) Trade Receivables 50,000 40,000
(c) Inventories 6,00,000 8,00,000
(d) Cash & Bank 4,90,000 6,70,000
TOTAL 57,50,000 56,40,000
Notes to Accounts:
(1) Reserve & Surplus: 31.3.2018 31.3.2017
General Reserve 3,50,000 2,80,000
Statement of P & L 1,50,000 1,20,000
5,00,000 4,00,000
(2) Long-term Borrowings:
10% Debentures 16,00,000 15,00,000
(3) Tangible Assets: Plant & Machinery 39,50,000 34,60,000
(4) Intangible Assets: Goodwill 50,000 40,000
(5) Current Investments:
Marketable Securities 10,000 30,000
Additional Information :
(i) The debentures were issued on 1.4.2017.
(ii) Machinery costing ₹ 70,000 (accumulated depreciation thereon ₹ 10,000) was
sold for ₹ 45,000.
(iii) Machinery costing ₹ 8,00,000 was purchased during the year.
(iv) Interim dividend of ₹ 11,000 was paid during the year.
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(v) Proposed Dividend for the year ended 31st March, 2018 was ₹ 20,000 and for
the year ended 31st March 2017, was ₹ 13,000.

ANSWER KEY
Ans.1 Net cash flow from operating activities Rs 2,76,500.
Ans.2 Calculation of cash from operating activities
RS RS
Net profit before tax 1,30,000
Adjustments:
Add: depreciation 20000
Goodwill written off 7000 27000
157000
Less: gain on sale of machinery 3000
Operating profit before working capital 154000
changes
Add: Trade payables 10,000
1,64,000
Less: increase in current assets:
Trade receivables 6000
Prepaid expenses 200
Decrease in current liabilities:
o/s expenses 2000 8200
net cash flow from operating expenses 155800

Ans.3 CASH FLOW FROM OPERATING ACTIVITIES

RS RS
Net profit before tax 272500
Adjustments:
Add: goodwill written off 9000
Depreciation 20000
loss on sale of fixed asset (machinery) 2000

303500
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operating profit before working capital

changes
ADD: decrease in inventory 4000
Less: decrease in advance income (8000)

Net cash flow from operating activities

2,99,500

Ans.4 Net cash used in operating activities Rs (1,06,000); Net cash used
in Investing activities (10,60,000); Cash inflow from Financing activities
Rs 11,36,000.
ANS.5 Net cash Flow in operating activities Rs 1,26,400; Net cash used
in Investing activities (30,200); Cash inflow from Financing activities Rs
71,400.
Ans.6 operating: 1,96,000; investing Rs (3,68,000); financing Rs
1,77,000.
Ans.7 Investing: Rs (5,96,000); Financing: Rs 5,06,000.
Ans.8 Cash from operating activities Rs 39,600.
Ans.9 Operating: Rs 5,49,000; investing: Rs 7,65,000; Financing: Rs
16,000.