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
| | 2021 | 2020 |
| Sales | 900 | 850 |
| Operating costs | -600 | -560 |
| Depreciation | -30 | -35 |
| Operating Profit | 270 | 255 |
| Finance costs | -10 | -8 |
| Profit before tax | 260 | 247 |
| Tax paid | -80 | -90 |
| Profit after tax | 180 | 157 |
Other Information
| | 2021 | 2020 |
| 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
Create Cash Flows from Operating Activities
| | 2021 |
| Profit after tax | |
| Depreciation | |
| Tax charge | 80 |
| 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
Note 1 – Inventory
| | 2021 |
| Inventory brought forward | |
| Inventory carried forward | |
| (Increase) in inventory (net investment in assets reducing cash available from operations) | |
Note 2 – Trade Receivables
| | 2021 |
| 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
| | 2021 |
| Trade payables brought forward | |
| Trade payables carried forward | |
| Increase in trade payables (net increase in liabilities increasing cash available from operations) | |
Note 4 – Tax
| | 2021 |
| Tax payable balance brought forward | 110 |
| Tax charge for the year | 80 |
| Tax paid in the year (operating cash flow) to balance | -90 |
| Tax payable balance carried forward | 100 |
Note 5 – Property, Plant & Equipment
| | 2021 |
| PPE at book value balance brought forward | 180 |
| Depreciation charged in year | |
| Additions to PP&E (net) to balance | |
| PPE at book value balance carried forward | 350 |
Here is the answer of this exercise.
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