Live Project

CASH FLOW STATEMENT

ASHER JOSEPH
 Introduction to the Topic

 The topic given to me was to visit a

manufacturing firm and collect its profit
and loss account and balance sheet for
the two years and on that basis prepare a
cash flow statement.
 Profit and Loss Account
 The Profit and loss account is generally prepared to
determine the profit and loss made by an organization
during a particular period. While preparing this account
the following points must be kept in mind :
 All expenses are debited to the Profit and loss account
 All incomes are credited to the Profit and loss account
 In addition certain adjustments are also treated given in
the trial balance
 Balance Sheet

A Balance Sheet is a statement of assets and

liabilities of a business organization at any particular
date. At the end of each accounting period, every
business organization prepares a Balance Sheet to
have a clear understanding of its assets and liabilities
which indicate the financial position of the concern
 Cash Flow Statement (AS-3 revised)

 Cash flow statement comes under the accounting

standard 3. The following concepts are important to
understand before preparing the cash flow statement:
 Cash : The general view of the term cash or cash
equivalents are short term highly liquid investments that
are readily convertible into cash with no or negligible loss
such as Government Bonds
 The second concept is that of the working capital , which
is mathematically illustrated as current assets – current
liabilities
 Uses OF Cash Flow Statement
 Ability to generate cash flows : The cash flow statement makes it
possible to predict the amounts, timing and uncertainty of future cash flows
on the basis of what has happened in the past.
 Ability to pay dividends and meet commitments : A cash flow statement
indicates the sources and uses of cash under suitable headings such as
operating, investing and financing activities respectively.
 Reasons for the difference between proit and loss and net cash flow
from operating activities : The figure of net profit is important since it
provides information about the success and failure of a business fro time to
time .
 Investing and financing transactions during the period : By analysing
the company’s investing activities the users of financial statements can
judge why assets and liabilities increased or decreased during the period
covered.
Components of Cash Flow

CASH FLOW
STATEMENT

OPERATING
INVESTING FINANCING
ACTIVITIES
ACTIVITIES ACTIVITIES
 Objective of study
 Primary Purpose : A primary purpose and objective of
cash flow statement is to provide information about the
cash receipts and cash payments of a business entity for
the accounting period covered by the income statement.
 Secondary purpose : The secondary purpose or
objective of the Cash Flow statement is to provide
information about the business entity’s operating,
investing and financing activities during the accounting
period.
 Methodology
 Data collection
 The company used for this study is Dabur Nepal Private Ltd, and
most of the information is based on the data obtained from the
company’s annual report.
 Also in addition various books and articles have been referred for
this study in order to correctly judge the financial position of the
enterprise and also to prepare the Cash Flow statement.
 The Profit and loss account and Balance sheet as provided in this
report is an extract from the Annual Report of Dabur Nepal Private
Ltd. Also mentioned in the Report are the names of the chief
operating officers in the management
 Introduction to Dabur
 Dedicated to Nature
The guiding force behind Dabur's growth and success has
been the wealth of nature and its limitless capacity to
support life,
 Dabur Nepal Private Limited was set up as an
independent Group company in 1992. This new company,
set amidst the verdant greens and towering mountains of
the Himalayan kingdom of Nepal, has established a
unique bond of technology and preservation.
 CASH FLOW STATEMENT (Indirect method)

PARTICULARS In lacs Date In lacs Date

A Cash flow from operating activities 31-Mar-04 31-Mar-05

Net profit as per P&L account 1841.53 1381.21

Add:
1014.3
Depreciation 1065.95 1

Amortization of Deferred expense 16.42 15.1

Interest 809.47 553.85

Fixed assets written off 91.77 91.77

Loss on sale of assets 10.74

Loss on sale of Bonds 120.48

2114.83 1675.03
Less:

Profit on sale of fixed assets 12.75

Interest received 11.28 8.09

Rent received 1.82 13.1 2.93 23.77

Operating profit before working capital changes 3943.26 3032.47

Working capital changes

Increase/Decrease in inventories 618.69 1779.19

Increase /Decrease in debtors 398.56 57.83

Increase/Decrease in Loans and advances 178.58 136.11

Increase/Decrease in Deposits and receivable 723.17 1239.28

Decrease /Increase in Liabilities 2425.27 892.56

Decrease /Increase in Provisions 78.02 145.19

Increase In working capital 4056.13 419.56

Cash generated from operation 8008.39 3452.03
Interest paid -1002.48 -516.87
advance tax paid -306.74 -417.96

Income tax adjusted for previous years -9.52 -41.92

Cash Generated from Operating activities 6689.65 2475.28

Cash Flow from Investing activities

Purchase of fixed assets - 1032.10 -2,329.58

Deferred Revenue expenses -75.56

Purchase of Investments 19.3

Sale of fixed assets 460.98 49.23

Sale of investments 419.78

Rent received 1.82 2.93

Cash Generated from Investing activities -225.28 -2,296.72

C Cash Flow from Financing activities

Payment of working capital loans -1373.42 -2.06

Repayment of term loans to banks -607.88

Repayment of unsecured loans to banks -4000

Deferred Financing from supplier -49.36 -8.26

Payment of dividend -364.23 -242.64

Tax on dividend -19.01 -12.77

Interest received 11.28 8.09

Cash flow from Financing activities -6402.62 -257.64

Net increase in cash flow 61.75 -79.08

Opening cash and bank balance 30.03 91.78

Closing cash and bank balance 91.78 12.7

 Research Findings
 In this case of Dabur Nepal private ltd. The Net profit for the previous
year 2004 was 1841.53 lacs as compared to the current year 2005
1381.21lacs , so there has been a decline in the net profits of the
company to the extend of 460.32 lacs .

 Also the depreciation amount has been provided on the assets @ 5%

approx. There has been a loss of assets and on bonds in the
previous year amounting to 131.22 lacs. In the area of working
capital there is a considerable decrease in the amount if compared to
the previous year.
 The turnover of the company has increased by 4.69% over the
previous year. The Net Profit after tax has reduced by 2.28% over
the previous year due to lower contribution margin.

 During the year the company has invested Rs 24.65 crore on

account of fixed assets. Out of which, major amount is spent
towards installing a new packing machine in Juice Plant in Flex
Pack and increasing cold store capacity. The company has
disposed off it’s fixed assets amounting Rs 4.51 crore during the
year.
 The reason for the low profits this year has been mainly due to
purchase of fixed assets as the company is taking drastic steps
towards modernizing and diversification necessary equipment is
needed. There are been an allocation of 1297.48 lacs for this
purpose.
 Conclusion
 To conclude it can be said that the financial
position of the company is sound though the net
profits have decreased but the shareholders
have not been affected strongly by this , the
company has taken positive steps towards
modernization and expansion
 Bibliography
 Dabur Nepal Private Ltd
 Corporate Accounting J.R.Monga