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MGT 401 Assignment 1 2025

The document presents a cash flow statement using both the indirect and direct methods, detailing cash flows from operating, investing, and financing activities. It shows a net cash increase of Rs. 491,400, with significant cash generated from operations amounting to Rs. 517,200. Additionally, it provides notes on fixed asset purchases and changes in debtors, contributing to a comprehensive financial overview.

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Imran Ali Ali
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227 views2 pages

MGT 401 Assignment 1 2025

The document presents a cash flow statement using both the indirect and direct methods, detailing cash flows from operating, investing, and financing activities. It shows a net cash increase of Rs. 491,400, with significant cash generated from operations amounting to Rs. 517,200. Additionally, it provides notes on fixed asset purchases and changes in debtors, contributing to a comprehensive financial overview.

Uploaded by

Imran Ali Ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Id: Bc230426792

a) Cash Flow Statement (Indirect Method)

Particulars Amount (Rs.)


Cash Flows from Operating Activities:
Net Profit before tax 445,075
Adjustments for non-cash items:
Add: Depreciation 35,425
Add: Provision for doubtful debts 6,000
Less: Gain on sale of fixed assets (10,000)
Operating Profit before Working Capital Changes 476,500
Changes in Working Capital:
Increase in stock (45,000)
Decrease in debtors (net) 13,000
Decrease in prepayments 3,800
Increase in creditors 65,000
Increase in accruals 6,400
Net Changes in Working Capital 43,200
Cash Generated from Operations 519,700
Less: Interest paid (2,500)
Net Cash from Operating Activities 517,200

| Cash Flows from Investing Activities: | | | Proceeds from sale of vehicle | 100,000 | | Purchase
of fixed assets | (379,075) | | Increase in long-term investments | (65,000) | | Decrease in short-
term investments | 10,000 | | Net Cash used in Investing Activities | (334,075) |

| Cash Flows from Financing Activities: | | | Proceeds from loan | 125,000 | | Proceeds from
issue of share capital | 183,275 | | Less: Interest paid (already considered above)| - | | Net Cash
from Financing Activities | 308,275 |

| Net Increase in Cash & Cash Equivalents | 491,400 | | Opening Cash & Bank (Net) = 5,000 +
12,000 - 35,000 | (18,000) | | Closing Cash & Bank (Net) = 4,500 + 15,000 - 6,000 | 13,500 |
b) Cash Flow from Operating Activities (Direct Method)
Particulars Amount (Rs.)
Cash received from customers 1,220,000
(Sales assumed as collected, with debtor decrease)
Less: Cash paid to suppliers (555,000)
(COGS = Opening Stock + Purchases – Closing Stock)
Less: Salaries paid (125,000)
Less: Rent paid (27,000)
Less: Advertisement expense (14,000)
Less: Interest paid (2,500)
Net Cash from Operating Activities 496,500

Notes:

 Fixed Assets Purchase = Change in Net Fixed Assets + Depreciation – WDV of asset sold
= (1,938,650 – 1,659,575) + 35,425 – 90,000 = Rs. 379,075
 Debtors (Net): 125,000 – 12,850 = 112,150 → 105,000 – 18,850 = 86,150 → Decrease = 26,000
 But change considered as (112,150 - 86,150) = +26,000

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