Quiz – Construct a Cash Flow Statement

Use the information in the worksheet to construct a cash flow statement for the year 31 December 2021. Calculate operating cash flow starting from both profit after tax and operating profit.

All figures in $ and in ‘000s, except per share data

Income Statement

Operating costs-600-560
Operating Profit270255
Finance costs-10-8
Profit before tax260247
Tax paid-80-90
Profit after tax180157

Other Information

Dividends paid in the year-150-120
Interest paid in the year = finance costs to be treated as a financing cash flow-10-8

Balance Sheet

Property, plant and equipment350180
Trade receivables150200
Total Assets680590
Share capital100100
Retained earnings220190
Trade payables160140
Tax payable100110
Total liabilities and equity680590

Create Cash Flows from Operating Activities

Profit after tax 
Tax charge80
Finance cost 
Decrease/(increase) in inventory (note 1) 
Decrease/(increase) in trade receivables (note 2) 
(Decrease)/increase in trade payables (note 3) 
Tax paid (note 4)-90
Net cash flows from operating activities 

Create Cash Flow Statement

Cash flows from operating activities 
Cash flows from investing activities 
Investment in Property, plant & equipment (note 5) 
Cash flows from financing activities 
Loans raised 
Dividends paid 
Interest paid 
Net change in cash 
Cash brought forward 
Cash carried forward 

Note 1 – Inventory

Inventory brought forward 
Inventory carried forward 
(Increase) in inventory (net investment in assets reducing cash available from operations) 

Note 2 – Trade Receivables

Trade receivables brought forward 
Trade receivables carried forward 
Decrease in trade receivables (net decrease in assets increasing cash available from operations) 

Note 3 – Trade Payables

Trade payables brought forward 
Trade payables carried forward 
Increase in trade payables (net increase in liabilities increasing cash available from operations) 

Note 4 – Tax

Tax payable balance brought forward110
Tax charge for the year80
Tax paid in the year (operating cash flow) to balance-90
Tax payable balance carried forward100

Note 5 – Property, Plant & Equipment

PPE at book value balance brought forward180
Depreciation charged in year 
Additions to PP&E (net) to balance 
PPE at book value balance carried forward350

Here is the answer of this exercise.

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