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Cash Flow Statement Case Solution Worksheet

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June 2003 Examiner's Solution
C a s e S o l u t i o n 1
1. Prepare a cash flow statement for the year to 30 April 2003.
(20 marks)
Cash flow statement
Year to 30 April 2003
£'000
Net cash flow from operating activities (see note 1)
−203
Returns on investment and servicing of finance
Interest
−52
Taxation
(Liability at 30.04.02)
−90
Capital expenditure
Payments for fixed assets
−1 405
(see note 2)
Financing
Receipt of long-term loans (see note 3)
220
Issue of share capital (see note 4)
1 210
1 430
Decrease in cash (see note 5)
−320
Note 1:
Profit before interest and taxation
446
Add back:
Depreciation
880
1 326

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Adjustments to working capital
2002
£'000
Increase in inventories
600
−500
Increase in debtors
2 425
−810
Decrease in creditors
360
−219
−1529
Net cash flow from operating activities
−203
Note 2:
Fixed assets
Net book value at 30.04.03
Net book value at 01.05.02
Decrease in NBV
Depreciation
Therefore, purchases of assets
Note 3:
Long-term creditors at 30.04.03
Long-term creditors at 30.04.02
Receipt of loans

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June 2003 Examiner's Solution Case Solution 1 1. Prepare a cash flow statement for the year to 30 April 2003. (20 marks) Cash flow statement Year to 30 April 2003 £'000 Net cash flow from operating activities (see note 1) −203 Returns on investment and servicing of finance Taxation Interest −52 (Liability at 30.04.02) −90 Capital expenditure Payments for fixed assets −1 405 (see note 2) Financing Receipt of long-term loans (see note 3) Issue of share capital (see note 4) Decrease in cash (see note 5) 220 1 210 1 430 −320 Note 1: Profit before interest and taxation 446 Add back: 880 Depreciation 1 326 Adjustments to working capital 2003 2002 £'000 £'000 Increase in inventories 1 100 600 −500 Increase in debtors 3 235 2 425 −810 141 360 −219 Decrease in creditors −1529 Net cash flow from operating activities −203 Note 2: Fixed assets £'000 Net book value at 30.04.03 6 250 Net book value at 01.05.02 5 725 Decrease in NBV 525 Depreciation 880 Therefore, purchases of assets 1 405 Note 3: £'000 Long-term creditors at 30.04.03 475 Long-term creditors at 30.04.02 255 Receipt of loans 220 Note 4: £'000 Share capital at 30.04.03 Share premium at 30.04.03 Share capital at 30.04.02 New shares subscribed 7 000 710 −6 500 1 210 New shares have been subscribed for an amount of £1 210 000. Note 5: £'000 Cash at bank at 30.04.03 55 Cash at bank at 30.04.02 375 Decrease in cash at bank −320 2. I ...
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