Question one

The management of Cobat LTD has presented you with statement of cash flow below;

Cobat LTD

Cash flow statement

For the year ended 31.03.2020

000 000

Reported net profit before tax 15,000

Adjustments

Depreciation on motor vehicles 4,000

Profit on disposal of motor vehicles (3,000)

Interest expense 8,000

Depreciation on furniture and fittings 3,000

Depreciation on buildings 10,000 22,000

Profit before movement in working capital 37,000

Working capital changes

Increase in stocks (8,000)

Decrease in debtors 2,000

Prepayments decreased 2,000

Increase in trade creditors 8,000 4,000

Cash generated from operating activities 41,000

Tax paid (6,000)

Return on investment & servicing of finance

Interest payable paid (5,000)

Dividends paid (6,000) (11,000)

Cash generated from return on investment & servicing of finance 24,000

Investing activities

Purchases of motor vehicles (23,000)

Purchase of land (40,000)

Proceeds of disposed motor vehicles 11,000 (52,000)

Cash used by investing activities (28,000)

Financing activities

Issue of debentures 10,000

Repayment of loan (4000)

Issue of shares 15,000 21,000

Cash generated from financing activities (7,000)

Cash and cash equivalent as at 1.04.2019 3,000

Cash and cash equivalent as at 31.03.2020 (4,000)

Required

Comment on the cash flows of the business in relation to operating, investing and financing activities. (10 marks)

Question two

The statement of cash flows is similar to the income statement but still the two differ in some aspects. Discuss the similarities and differences between the two financial statements. (5 marks)

Question three

The table below provides information relating to Kim Kim INC over an eleven year period. (Amounts are in billions)

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Net sales 16.75 15.90 15.08 14.35 13.57 14.52 13.98 13.01 12.30 12.55 13.15

Gross profit 6.36 6.12 5.91 5.66 5.55 6.71 6.38 6.00 5.25 5.30 5.47

Operating income

(after tax) 1.65 1.70 1.91 1.81 1.80 1.75 1.96 1.82 1.24 1.02 1.53

Net income 1.50 1.57 1.80 1.69 1.67 1.61 1.80 1.67 1.10 0.90 1.40

Restructuring charge

(after tax) 0.35 0.17 - - - - - - - - -

Net income before

restructuring 1.84 1.74 1.80 1.69 1.67 1.61 1.80 1.67 1.10 0.90 1.40

Operating income

before restructuring 2.00 1.86 1.91 1.81 1.80 1.75 1.96 1.82 1.24 1.02 1.53

Total assets 17.07 16.30 17.02 16.78 15.59 15.01 14.48 12.82 11.69 11.27 11.85

Total liabilities 10.97 10.75 10.39 10.01 9.94 9.36 8.71 7.72 7.66 7.14 7.36

Long-term debt 2.28 2.59 2.30 2.73 2.84 2.42 2.00 1.93 2.07 1.80 1.74

Shareholders equity 6.10 5.56 6.63 6.77 5.65 5.65 5.77 5.09 4.03 4.13 4.48

Treasury stock at cost 1.39 6.38 5.05 3.82 3.35 2.75 1.97 1.42 1.45 0.62 0.21

Required

Conduct an index-number trend analysis separately for every item reported in the table (e.g., net sales, gross profit, etc.). Use 2009 as the base year. (15 marks)

Question one

The management of Cobat LTD has presented you with statement of cash flow below;

Cobat LTD

Cash flow statement

For the year ended 31.03.2020

000 000

Reported net profit before tax 15,000

Adjustments

Depreciation on motor vehicles 4,000

Profit on disposal of motor vehicles (3,000)

Interest expense 8,000

Depreciation on furniture and fittings 3,000

Depreciation on buildings 10,000 22,000

Profit before movement in working capital 37,000

Working capital changes

Increase in stocks (8,000)

Decrease in debtors 2,000

Prepayments decreased 2,000

Increase in trade creditors 8,000 4,000

Cash generated from operating activities 41,000

Tax paid (6,000)

Return on investment & servicing of finance

Interest payable paid (5,000)

Dividends paid (6,000) (11,000)

Cash generated from return on investment & servicing of finance 24,000

Investing activities

Purchases of motor vehicles (23,000)

Purchase of land (40,000)

Proceeds of disposed motor vehicles 11,000 (52,000)

Cash used by investing activities (28,000)

Financing activities

Issue of debentures 10,000

Repayment of loan (4000)

Issue of shares 15,000 21,000

Cash generated from financing activities (7,000)

Cash and cash equivalent as at 1.04.2019 3,000

Cash and cash equivalent as at 31.03.2020 (4,000)

Required

Comment on the cash flows of the business in relation to operating, investing and financing activities. (10 marks)

Question two

The statement of cash flows is similar to the income statement but still the two differ in some aspects. Discuss the similarities and differences between the two financial statements. (5 marks)

Question three

The table below provides information relating to Kim Kim INC over an eleven year period. (Amounts are in billions)

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Net sales 16.75 15.90 15.08 14.35 13.57 14.52 13.98 13.01 12.30 12.55 13.15

Gross profit 6.36 6.12 5.91 5.66 5.55 6.71 6.38 6.00 5.25 5.30 5.47

Operating income

(after tax) 1.65 1.70 1.91 1.81 1.80 1.75 1.96 1.82 1.24 1.02 1.53

Net income 1.50 1.57 1.80 1.69 1.67 1.61 1.80 1.67 1.10 0.90 1.40

Restructuring charge

(after tax) 0.35 0.17 - - - - - - - - -

Net income before

restructuring 1.84 1.74 1.80 1.69 1.67 1.61 1.80 1.67 1.10 0.90 1.40

Operating income

before restructuring 2.00 1.86 1.91 1.81 1.80 1.75 1.96 1.82 1.24 1.02 1.53

Total assets 17.07 16.30 17.02 16.78 15.59 15.01 14.48 12.82 11.69 11.27 11.85

Total liabilities 10.97 10.75 10.39 10.01 9.94 9.36 8.71 7.72 7.66 7.14 7.36

Long-term debt 2.28 2.59 2.30 2.73 2.84 2.42 2.00 1.93 2.07 1.80 1.74

Shareholders equity 6.10 5.56 6.63 6.77 5.65 5.65 5.77 5.09 4.03 4.13 4.48

Treasury stock at cost 1.39 6.38 5.05 3.82 3.35 2.75 1.97 1.42 1.45 0.62 0.21

Required

Conduct an index-number trend analysis separately for every item reported in the table (e.g., net sales, gross profit, etc.). Use 2009 as the base year. (15 marks)