Compare Table 15.7 with Table 15.8. Which parts of these tables are similar? Which are different? Which table provides more help in understanding working capital changes? Which table shows most clearly whether cash from customers is sufficient to pay cash to suppliers? What do you conclude about the relative merits of each table?

Transcribed Image Text:

Table 15.7 Statement of cash flows using the indirect method Notes Cash flows from operating activities 1 Profit before taxation m m 101 Adjustment for items not involving a flow of cash: 23 Depreciation 30 Gain on disposal of equipment (5) 25 Adjusted profit 126 456 (Increase) in inventories 5 (Increase) in trade receivables 6 Increase in trade payables Increase/(decrease) in cash due to working capital changes Cash generated from operations 120 7 7 Interest paid 8 Taxes paid (16) (29) 75 (80) 7240 901 10 11 12 234 13 14 15 15 55 Net cash inflow from operating activities Cash flows from investing activities Purchase of non-current assets Proceeds from sale of non-current assets Interest received Net cash used in investing activities Cash flows from financing activities Proceeds from issue of share capital Proceeds from long-term borrowing Dividends paid Net cash used in financing activities Increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the start of the period Cash and cash equivalents at the end of the period 25 (51) (14) 5