Hi,

I?m supposed to do a business report on a cash position of a company using the information in the Cash Flow Statement. This is a group assignment so my colleagues and I divided up the assignment, and my portion is to do an analysis and calculate rations on the Investing and Financing Activities. I attached the assignment question as well as the financial statements, including the Cash Flow Statement which is at the bottom. I need this assignment urgently, so pls help.

Thank you

Lydia

2013 '000 '000 '000 Cost Depn NBV Land & Buildings 58,000 12,000 46,000 Plant & Machinery 32,500 14,500 18,000 90,500 26,500 64,000 Non current assets Bank 65,000 Total Assets 129,000 Capital: Ordinary Share Capital 35,000 Retained Profits 70,000 Non Current Liabilities Loans 20,000 Current Liabilities Current Assets: Inventories Accounts receivable Current Asset Investment Share Premium Account Revaluation Account Accounts payable Proposed Dividends Bank overdraft Taxation Total Equity and Liabilities Equity Plc 25,000 35,000 5,000 0 10,000 2,000 23,000 27,000 6,600 3,000 2,400 129,000 Income Statement for the year ending 31st October 2013: Sales Cost of Sales Gross Profit Other operating expenses Profit before interest Interest Profit before taxation Taxation Profit after taxation '000 98,000 -48,000 50,000 -35,000 15,000 -1,200 13,800 -2,800 11,000 Cash Flow Statement Cash Flow From Operating Activities Net Profit Before Interest and Tax Depreciation Loss on Disposal of Machinery Interest Tax Dividends Paid Change in Working Capital Inventories Accounts Receivable Current Asset Investment Account Payables Changes in Working Capital Net Cash Flow From Operating Activities 15,000 6,000 1,000 -1,200 -2,400 -12,400 5,000 -7,000 -5,000 -5,000 -12,000 -6,000 Cash Flows From Investing Activities Capital Expenditures Sale of Machinery -23,500 500 Net Cash Flows From Investing Activities -23,000 Net Cash Flow From Financing Activities New Shares Issued Long-Term Loans Bank Overdraf Reevaulation Net Cash Flows From Financing Activities Total Changes in Cash Cash Blanace, Sarting Cash Balance, Ending 7,000 5,000 3,000 2,000 17,000 -12,000 12,000 0 2012 '000 '000 '000 Cost Depn NBV 40,000 10,000 30,000 30,000 12,000 18,000 70,000 22,000 48,000 30,000 28,000 0 12,000 CapEx Land & Buildings Plant & Machinery Total 70,000 118,000 30,000 58,000 15,000 8,000 0 20,000 32,000 11,000 0 2,000 118,000 Depreciation Land & Buildings Plant & Machinery Total Sale of Asset Machinery Depreciated NPV Sold Loss Dividends Dividends New Dividends Paid Ending Balance Taxation Taxation New Taxes Paid Ending Taxation Land & Buildings Plant & Machinery 18,000 5,500 23,500 Depreciation Land & Buildings Plant & Machinery 2,000 4,000 6,000 Sale of Asset Machinery Depreciated 3,000 1,500 1,500 500 -1,000 11,000 New Dividends 8,000 12,400 Ending Balance New Taxes Ending Taxation 6,600 2,000 2,800 2,400 2,400 Week 3 Collaboration Group Work Question a Equity PLC has the following balance sheets and income statement for the year ending 31 st October 2013 and 2012. Equity plc Finance and Accounting for Managers 4 CopyrightLaureate Online Education All rights reserved, 2000-2014. The Module, in all its partssyllabus, guidelines, technical notes, images and any additional materialis copyrighted by Laureate Online Education B.V. Last update: 05 November 2014 Balance Sheets as at 31st October: 2013 '000 Cost '000 Depn 2012 '000 '000 '000 '000 NBV Cost Depn NBV Non current asssets Land & Buildings 58,000 12,000 46,000 40,000 10,000 30,000 Plant & Machinery 32,500 14,500 18,000 30,000 12,000 18,000 90,500 26,500 64,000 70,000 22,000 48,000 Current Assets: Inventories 25,000 30,000 Accounts receivable 35,000 28,000 5,000 0 0 12,000 Current Asset Investment Bank Total Assets 65,000 70,000 129,000 118,000 Capital: Ordinary Share Capital 35,000 30,000 Share Premium Account 10,000 8,000 2,000 0 23,000 20,000 Revaluation Account Retained Profits 70,000 58,000 Non Current Liabilities Loans 20,000 15,000 20,000 15,000 Current Liabilities Accounts payable Proposed Dividends Finance and Accounting for Managers 27,000 32,000 6,600 11,000 5 CopyrightLaureate Online Education All rights reserved, 2000-2014. The Module, in all its partssyllabus, guidelines, technical notes, images and any additional materialis copyrighted by Laureate Online Education B.V. Last update: 05 November 2014 Bank overdraft 3,000 0 Taxation 2,400 2,000 Total Equity and Liabilities 39,000 45,000 129,000 118,000 Equity Plc Income Statement for the year ending 31st October 2013: '000 Sales 98,000 Cost of Sales Gross Profit Other operating expenses -48,000 50,000 -35,000 Profit before interest 15,000 Interest -1,200 Profit before taxation 13,800 Taxation -2,800 Profit after taxation 11,000 The following additional information is available: 1) 2) 3) Equity PLC recorded an increase in the value of its land of 2,000,000 during the year. The company has proposed dividends of 8,000 for the year. During the year, an item of machinery that originally cost 3,000,000 was sold for 500,000 making a loss of 1,000,000. This item is included in the operating expenses. Required: a) Prepare a Cash Flow Statement for the year ended 31 st October 2013 in accordance with IAS 7 (revised), using the indirect method. b) Prepare a Business Report commenting on the cash position of Equity PLC. Finance and Accounting for Managers 6 CopyrightLaureate Online Education All rights reserved, 2000-2014. The Module, in all its partssyllabus, guidelines, technical notes, images and any additional materialis copyrighted by Laureate Online Education B.V. Last update: 05 November 2014 Notes to assist you: 1. Remember, when you are using the indirect method, you need to start with the net profit before interest and tax. Can you see what figure this is? 2. In order to reconcile the profit to the net cash generated from operations, you need to add back non cash deductions such as depreciation for the year and you need to deduct non cash income, such as any gain on the disposal of assets. Can you work out the depreciation figure for the year? What does note 3 above tell you about the disposal of the machinery? Are there any other non cash adjustments that need including here? 3. The next step is to work out the adjustments for the changes in working capital items, namely in accounts receivables, accounts payables and inventories. Remember increases in current assets represent a cash outflow and should be deducted here. Decreases in current assets represent a cash inflow and should be added back. The opposite is true for current liabilities. 4. Once these adjustments are done, you have a figure that is the net cash flow from operating activities. 5. The next step is to work out the four main headings in the cash flow statement, namely net cash from operating activities, cash flows from investing activities, cash flows from financing activities, net cash movement during the year and finally this figure is reconciled back to the total cash and cash equivalents at the start and end of the year. 6. In order to work out the net cash from operating activities, you need to deduct any interest paid, income tax paid and dividends paid. Can you work out the cash paid for these items? Remember, it is not just the amounts taken from the financial statements; you need to work out the cash amount, by starting with the opening balance, adding what has been allocated during the year and deducting any closing balance. See the TYK questions for an example of this relating to taxation. This principle that you have applied to taxation will also need to be applied to some of the other items such as dividends here and also other assets and liabilities later on. Deduct your taxation, interest and dividend figures to arrive at the net cash from operating activities. 7. The next step is to calculate the cash flows from investing activities. This section deals with the movements in non-current assets. Reading note 3, can you work out the actual cash received from the sale of the machinery? Also, by looking at the opening and closing cost balances of the non-current assets on the SoFP and also taking into account the disposal in note 3, can you work out how much cash has actually been paid for non-current assets? This is using the same principle as explained in note 6 above relating to taxation, apart from you do not have a payment in the year in the income statement, but you do have some information in the notes relating to this. The sum of asset movements will give you the net cash movement from investing activities. 8. You can now work out the cash flow from financing activities. For this you need to work out the changes in share capital and premium and also any changes in long term loans. Has the company received cash or paid out cash in these two areas? You can ascertain this by looking at the SoFP for both years. Add all these up to give you the net cash flow from financing activities. 9. All that is left to do is add all your sub totals together; this will give you the total cash increase or decrease in the year. The final step is to reconcile this cash figure back to the movement in cash and cash equivalents for the year. Can you work out the total cash movement in the bank and also any cash equivalents the company may have? 10. Good luck