Cash inflows from these sources includes: e) Taxation: These cash flows will be those to and from the tax authorities in relation to the company's revenue and capital profits, i.e. f) Investing activities: the acquisition and disposal of long term assets and other investments not included in cash equivalents.
Exercise 3.3 Sources and applications of funds II Using the data and information in the annual reports (especially the balance sheet and income statements) of Cerial Marketing Board provided for 19: Funds (or capital) is a collective term applied to the assortment of productive inputs that have been produced.
Funds may be broadly categorised into operating (or working) capital (difference between current assets and current liabilities), and ownership (or investment) capital.
Thus, if a company sustains an operating loss before depreciation, funds are not provided regardless of the magnitude of the depreciation charges.
Application of funds of a company usually include: To avoid double counting, we usually compute gross changes in fixed assets by adding depreciation for the period to net fixed assets at the ending financial statement date and subtract from the resulting amount the net fixed assets at the beginning financial statement date.
Some businesses or industries will continue to find fund flow statements useful and informative.
For this reason, it is necessary to examine funds flow statements.
It can be argued that 'profit' does not always give a useful or meaningful picture of a company's operations.
Readers of a company's financial statements might even be misled by a reported profit figure.
Indirect method cash flow statement Figure 3.1 shows a pro forma cash flow statement.
Figure 3.1 Pro forma cash flow statement a) Cash in hand and deposits repayable on demand with any bank or financial institution.