Comment on a company’s cash management (indirect method)

Axiomatic Ltd’s statement of cash flows for last year is shown. Provide observations about how the company managed its cash during the year.

AXIOMATIC LTD STATEMENT OF CASH FLOWS FOR LAST YEAR

$ $

Operating activities:

Net profit for the year 94 900 Add back non-cash expenses:

Depreciation expense 216 800 Amortisation expense 14 200 Bad debt expense 38 900 269 900 Non-cash working capital changes:

Increase in accounts receivable (143 900)

Increase in inventories (71 600)

Increase in accounts payable 87 000 (128 500)

Cash generated by operations 236 300 Investing activities:

Additions to noncurrent assets (429 100)

Proceeds on disposal of noncurrent assets 27 700 (401 400)

Financing activities:

Short-term bank loan 30 000 Additions to noncurrent debt 343 200 Repayments of noncurrent debt (316 000)

Share capital issued 200 000 Dividends paid during the year (40 000) 217 200 Increase in cash for the year 52 100 Cash, beginning of year (93 500)

Cash, end of year (41 400)