01 Jan- Dec 2007
Operating profit 91,680
Depreciation 52,000
Increased in Inventories (19,600)
Increased in Trade Receivables (35,600)
Decrease in Trade Payables (8,400)
Interest Paid (2,880)
Taxis Paid (24,800)
Dividend (16,000)
Net Cash from operating activities 36,400
Investing activities
Purchase of assets (124000)
Finance activities
Issue of shares 56000
Issue of loan stock 8000
Net cash inflow from financing activities 64000
Net decrease in cash and cash equivalents
36400 -124000 + 64000 = (23600)
Cash and cash equivalents beginning 18400
Cash and cash equivalents ending (5200)
1. Use the cash flow statement you have prepared to explain why the profit and the net cash flow are not the same figure. The reason for the difference is that the cash flow from operating activities was 36400 and in order to finance purchase of assets of 124000, the firm had to raise equity capital of 56000 and obtain a loan of 8000.
Details Below
Extract from the Income Statement
Lytmat Limited for the year ended 31 December 2007
£’000
Operating profit 91,680
Interest payable (2,880)
Profit before tax 88,800
Taxation (32,800)
Profit after tax 56,000
Balance Sheets
31 December 2007 31 December 2006
£’000 £’000 £’000 £’000
Non-current assets 592,000 520,000
Current assets
Inventories 56,000 36,400
Trade receivables 85,600 50,000
Cash at bank - 18,400
141,600 104,800
Current liabilities
Trade payables (28,400) (36,800)
Current tax payable (32,000) (24,000)
Bank overdraft (5,200) -
Net current assets 76,000 44,000
Non-current liabilities
8% loan notes (40,000) (32,000)
Net assets 628,000 532,000
Ordinary share capital 496,000 444,000
Share premium 20,000 16,000
Retained earnings 112,000 72,000
628,000 532,000
The following information is also provided:
(1) Dividends paid during the year totalled £16,000,000
(2) The depreciation charge for the year was 52,000,000
1-Required: Prepare a cash flow statement for the company for the year ended 31 December 2007.
2-Use the cash flow statement you have prepared to explain why the profit and the net cash flow are not the same figure.
