Question

Main questions. Attempt all questions, each one carry 12 marks.

Question: 1

Cash Flow Statement - Period 2018
Description	XYZ Limited	Rafhan
Profit before Tax	800,000	4,000,000
Adjustments: Add back non cash item.
Depreciation	400,000	1,000,000
Adjusted Profit
Working Capital Changes
Changes in Trade Creditors	(200,000)	1,000,000
Changes in Debtors	500,000	1,200,000
	300,000	2,200,000
Tax Paid	(50,000)	(550,000)
Net Cash flow from operating activities	1,450,000	6,650,000
Cash Flow from Investing activity
Addition during the period - PPE	(800,000)	(8,000,000)
Cash Flow From Financing Activity
Loan obtained/ (repaid) during the period.	(400,000)	2,000,000
Net cash flow during the Period.	250,000	650,000
Requirements:
Comments over Cash flow position of each company individually as per following guidelines.
1- Over All Cash Flow position
2- Category wise and line item wise cash flow analysis

Answer 1

1) The over-all Cash Flow position of the company:

XYZ Ltd. : The company has positive cash flow along-with the positive Cash from the operating activities.

Rafhan : The company has positive cash flow along-with the positive Cash from the operating activities.

2) Category-wise and line item:

XYZ Ltd :

a) Cash flow from operating activities: The recovery from the debtors is higher and credit period to creditors has been contracted so larger payment has been made in the current year.

b) Cash flow from Investing activities: The Company has invested more over the previous year in fixed assets or PPE.

c) Cash flow from Financing Activities: The Company has excess payment of the loan this year over last year.

Rafhan :

a) Cash flow from operating activities: The recovery from the debtors is higher as credit period allowed to the debtors is reduced and credit period to creditors has been extended so lesser payments have been made in the current year.

b) Cash flow from Investing activities: The Company has invested more over the previous year in fixed assets or PPE.

c) Cash flow from Financing Activities: The Company has obtained more loan in the current year to finance its expansion plan through investing in PPE.