Analysis and Interpretation of the Cash flow Statements

Presented by :

Darshan Kondalkar Ajit Mangulkar Sushant Mhatre Chandan Jagtap Vinayak Kamble

69 71 73 65 67

OBJECTIVES OF CASH FLOW STATEMENT

To identify the causes of increase or decrease in the cash position of the firm during the specific period.

To understand cash generated on account of business operations during the year. To understand cash impact on the current assets and liabilities during the year .

OBJECTIVES OF CASH FLOW STATEMENT

To understand the investment and financing pattern followed during the year. To ensure necessary action for maintenance of adequate liquidity.
To help in the projection of future cash flows.

SOURCES OF CASH IN FLOWS

Issue of shares for cash Issue of debentures or bonds for cash Borrowings of term loans form banks Operations of the business Sale of fixed assets for cash Cash collections from debtors

CASH OUT FLOWS (Uses)

Payments of dividend in cash Payments to creditors Repayments of borrowings Redemption of preference shares in cash Purchase of fixed assets

ADVANTAGE OF CASH FLOW STATEMENT

It is an vital analytical tool for efficient management of cash and assessment of cash position. It helps in maintaining liquidity at optimum levels to ensure maximum profitability. It helps the management in adapting appropriate invest policy. It reveals complete story of cash movements.

LIMITATION OF CASH FLOW STATEMENT

Cash flow statement can not replace income statement. Cash generated is not necessarily the profits generated. Liquidity position can not always be truly revealed by cash flow statement since it possible to MANOEUVRE some of the items.

Cash flow Operating Activity: Deprecation Provision for tax Goodwill written off Loss on sale of assets profit on sale of assets To transfer to general reserve

Operating profit before Capital changes

Decrease in Debtors Increase in Bills receivable Increase in Stock Decrease in Prepaid expenses Decrease in Creditors Increase in Bills Payable

Investment Activity: Purchase of Building Purchase of Land Sale of Fixed assets Dividend received on investment

Financing Activity: Issue of shares Issue of Debenture Loan Taken Payment of Dividend Redemption of shares and debenture Payment of Tax

Cash Flow Statement of Infosys

Cash flows from Operating Activities (in Rs. Crore) Net profit before tax 1435

FY 11 9,325

FY 10 7,899

Adjustments to reconcile profit before tax to cash provided by operating activities (Profit)/loss on sale of fixed assets Provision for investments Depreciation 854 (2) (9) 905

Interest and dividend Income

Effect of exchange rate differences on translation of Deferred tax liability Effect of exchange differences on translation of foreign currency cash and cash equivalents Effect of exchange rate differences on translation of subsidiaries Changes in current assets and liabilities Sundry debtors {965}

(1,154)
(8) (45) 54

(881)

31 54

(1,159)

194

Loans and advances Current liabilities and provisions Income taxes paid {1093}

(758) 489 (2,846) 4,752

(438) 187 (1,753) 6,187

Net Cash Generated by Operating Activities Cash flows from Financing Activities :issuance of share capital on exercise of stock options Dividends paid during the year Dividend tax paid Net Cash Used in Financing Activities Cash flows from Investing Activities:Purchases of fixed assets and change in capital work-in-progress {2155} { 1794}

24
(3,140) (524) (3,640)

89
(1,346) (228) (1,485)

(1,305)

(658)

Payment for acquisition of business, net of cash acquired Investments in/(disposal) of securities Proceeds from disposal of fixed assets Interest and dividend received 277 140

(3) 3,558 1,148 3,398

(173) (3,698) 2 871 (3,656) 53 (3,603) (31) 1,068 10,993 50

Cash flow from investing activities before exceptional item Proceeds from sale of long-term investments, net of taxes

3,398
45 4,555 12,111 -

Net Cash used in Investing Activities

Effect of exchange differences on translation for foreign currency cash and cash equivalents Net increase in cash and cash equivalents during the year 3487 Cash and Cash Equivalents at the Beginning of the Year Add: Opening balance of cash and cash equivalents arising on consolidation of controlled trusts

Cash and Cash Equivalents at the End of the Year

16,666

12,111

Cash flow Statement of Wipro

Cash flows from Operations Net income Depreciation & amortization

2010 46,116 7,831 -308 9,294 772

2011 53,321 8,211 -192 9,714 444

Investment gain & loss

Income taxes Stock based compensation

Working capital changes

Accounts receivable Inventory Accounts payable Other working capital Minority Interest
-2,150 -218 -66 -4,051 0 -10,699 -1,781 5,840 -14,738 0

Other items Cash provided by operat...

4,555 58,912

4,389 49,730

Income tax paid

Net cash generated from op... Cash flows from Investment Investments in PPE Sale of PPE Purchases of investment Sales/Maturities of investment Acquisitions, net Lease Cost Other investing activities

-7,914
50,998

-9,293
40,437

-12,631 397 -340,891 325,770 -4,399 0 -5,800

-12,211 521 -474,476 456,894 -140 0 5,810

Net cash used for Investin... Cash Flows From Financing Debt issued Debt repayment

-33,815

-17,239

63,011 -55,661

72,596 -82,718 25

Common stock issued

Dividend paid

66
-6,823

-15,585
-696

Interest Paid
Other financing activities

-1,194
0

0
-26,378

Net cash provided by Finan...

Others Net change in cash Cash at beginning of period Cash at end of period Free Cash Flow

-601
-1,258 15,324 48,232 63,556 38,367

523
-2,657 63,556 60,899 28,226

Conclusion

Thanking You