lOMoAR cPSD| 33916030

Sinhagad College of Commerce Kondhwa

(BK), Pune – 48

A Project on Working of study on cash flow

statement of company
By
Mr. Tushar Upade of TYBBA

Under the guidance of Ms. Sushila jamdade

Department of Business Administration

(BBA) 2023-2024

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STES’S
SINHGAD COLLEGE OF COMMERCE CERTIFICATE

This is to certify that Mr. Tushar Upade of TYBBA

(Sem 5) has worked and completed the project in the
subject of “study on cash flow statement of
company’’ under our guidance and direction in all
respects. His project is a bonafide work completed in
partial fulfillment of B.B.A degree of Savitribai Phule
Pune University. His work is found to be satisfactory.

Mr. Sarang Hatvalne Dr. Makarand Wazal

PROJECT GUIDE PRINCIPAL
Mr. Avinash Patil
HOD

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Student Declaration
I ,Tushar Upade hereby declare that the present
Project Report for the Subject “ study on cash
flow statement of company” of TYBBA (Sem 5) is
uniquely prepared by me.
Name of the Student :- Tushar Upade
Roll No :- F10
Date and Signature :-

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CONTENTS

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Sr.no Chapter

1 Introduction

2 Review of literature

3 Theorotical framework

4 Case study and Data collection

5 Conclusion

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CHAPTER 1:
INTRODUCTION Commented [TU1]:

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1.1. Introduction of the Topic:

The cash flow statement is one of the most important financial statement of a company
that is utilized in cash flow analysis. Cash flow is the influential force behind the function of a
business. To fully know a company’s capability as an ongoing concern, it is necessary to
compute a few ratios from the given data of cash flow statement of the company. When it comes
to the liquidity study, cash flow information is more trustworthy than balance sheet and income
statement. The topic of my paper is to analyze the cash flow statement from the its activities and
to understand the change in the flow of cash comparing 3 years’ cash flow statement of the
company and this paper also seek out to focus on the gap in the literature by representing the
helpfulness of the cash flow ratios to know the liquidity position of the business.

1.2. Rationale of the study:

The Rational of the study to know about the liquidity position of the business for that
cash flow analysis is important. The cash flow statement becomes more significant to the extent
that the financial condition does not improve. If cash is inadequate, companies will increasingly
need to observe their cash flows. For this cause, in most studies the cash flow statement is
measured to be one of the mainly vital elements in the financial statements. The growing
attention on the generation and monitoring of cash flows by companies and their liquidity
position has lead to bigger focus on the cash flow statement by users of financial reporting and
supervisors.

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1.3. Research Gap:

This study focused on the need for analyzing the accounting information in the reports of
the company to help decision makers especially those related to the variables affecting liquidity.

And we can summaries the importance of this study in the following points:

1- To determine the relevance of the cash flow statement (CFS), also known as statement of
cash flows, for analyzing a company’s financial statements.

2- To know Liquidity measures tools and how they could reflects the level of liquidity in the
company

1.4. Objectives of the study:

1)To observe the statement of information of Odisha Power Generation Corporation
(OPGC) by way of a cash flow statement which classified cash flow during the period from
operating, investing, and financing activities.

2) To evaluate growth and running of Odisha Power Generation Corporation.

3)To estimate and analyze the financial performance of the company.

1.5. Research Methodology:

This Research paper implements the descriptive method of study. This paper contains the cash
flow statement of OPGC for a period of 3 years from 2015-2018 and the analysis of the
statement is done with the help of some cash flow ratios, tables and charts.

1.6. Scope of the study:

This study focuses on the cash inflows and outflows of OPGC and how it affect the whole
financial performance of the company. The study was conducted with the help of annual reports

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of the company which was given by the company itself and other additional information was
collected from the company’s website. This study was carried out within a time frame of 45 days.

1.7. Sources and Methods of Data Collection:

It is an systematic research based on the secondary data. It examine the financial records of the
concern using theoretical framework of cash flow statement analysis. information of cash flow
statement of 3 years i.e. 2015-16, 2016-17 and 2017-18 is comparatively studied to recognize
strength and weakness in cash flow of the business.

Secondary data includes figures concerning cash inflow and cash outflow in cash flow statement
accounted in annual report of the company for three years i.e.2015-16, 2016-17 & 2017-18 . Also
some main information is gathered by various sources of secondary data such as books, company
website, and other websites.

1.8. Limitations of the study:

• Time limit : The study is based on the study of financial cash flow, but the assigned time
is not sufficient for a whole and productive study
• Lack of understanding: Due to lack of understanding, there is a possibility of having
some inaccuracy in the report however best attempt has been applied to avoid any kind of
error.

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CHAPTER 2:
REVIEW OF LITERATURE

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1) Aghdas Jafari Motlagh, (2013) According to his study, he studied how to

prepare a cash flow statement and how it is
different from funds flow statement. The study
was collected from journals,websites,etc.He
found that cash flow statement is more
important to execute a business plan in short
run rather than funds flow statement
2) Paliwal Ajao,(2015) According to him, Cash flow statement is a
necessary tool to analyse the financial
performance of a business. He also found out
that changes in cash flow can be seen if two or
more financial years compared. The study
found the net changes in net cash or cash
equivalents and it's allocation in three business
activities and also the strength and weakness in
cash flow statement.
3) Khirkham, (2012) According to him, information for these ratios
obtained from the balance sheet, might not
always be reliable due to various accounting
measurement options of the values of assets
and accrual accounting. As such, there is the
need for a more accurate measure that reflects
the actual liquidity position of a company.
4) Armen (2013) finds that the practice by financial researchers
is to
formulate cash flow ratios as the means of
assessing the liquidity and solvency of a
company.
Generally, the emphasis is placed on the
information derived from the statement of cash
flows as it provides clearer picture to creditors,
analysts and investors with regard to the
company’s cash flows position

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5) Larson, Wild and Chappetta (2006) They believe that the statement of cash flows
can show a company’s ability to finance its
expenditure from operations, pay its existing
debts as they mature and measure the
company’s ability to meet unexpected
obligations and to pursue new business
opportunities. The information from the
statement of cash flows can be converted to
ratios to analyze the financial position of a
company
6) Eyisi and Okpe (2014) In their study, several cash flow ratios and
traditional ratios adapted from previous
research
for assessing corporate performance were
employed. They discover that although the
traditional liquidity and asset management
ratios provide evidence that suggest good
liquidity position for a company, the cash basis
ratios indicate that the liquidity position is
indeed negative. Thus, they conclude that cash
basis ratios can be better tools for assessing
corporate performance as cash basis ratios
provide better insight into the viability and
liquidity position of a company.
7) Knechel et al. (2007) He pointed that the cash flows statement helps
to assess the capability of a company to
generate future positive cash flows.
8)

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CHAPTER 3:
THEORETICAL FRAMEWORK

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3.1.Meaning:
Cash flow is basically the movement of cash into and out of the business; it's the sequence of
cash inflows and outflows that conclude the business' solvency. Cash flow analysis is the study
of the order of your business' cash inflows and outflows, with the intention of sustaining an
sufficient cash flow for the business, and to present the basis for cash flow management. Cash
flow analysis include examining the components of the business that influence cash flow,
such as inventory, accounts receivable, credit terms, and accounts payable. By performing a cash
flow analysis, you'll be able to easily discover cash flow problems and get ways to progress your
cash flow.

Cash Flow analysis is made with the help of the cash flow statement of the company. The
statement is given with the other financial statements in the yearly reports of the business. The
cash flow statement comprise all cash inflows a company receives from its continuing operations
and external investment sources, and all cash outflows that is given for business activities
throughout a given quarter. In this study, it give of the cash flow statement and how it helps to
analyze a business for investing.

Cash Flow Analysis is allocated into three parts – Cash flow from Operating activities, Cash flow
from Investment activities and Cash flow from financing activities.

a] Cash Flow from Operating Activities: Cash generated by production and sales of
business is reflected under this head. It comparatively denotes inflow of cash from operating
activities and outflow of cash for business operating expenses. E.g. cash from operation is the
revenue net of expenses.

b] Cash Flow from Financing Activities: This section of Cash flow statement denotes cash
generated from activities to finance the business operation. E.g. cash receipt on account of issue
of equity shares or debentures etc. and cash paid to such stake holders. Dividend to equity shares
or interest on debenture etc.

c] Cash Flow from Investing Activities: This section denotes cash invested in long term
assets e.g. purchase of machinery and other long term assets as well as other current assets such
as purchase of equity shares of other company etc. and cash receipts from such investing
activities e.g. dividend received, interest received sales of machinery and scrap etc.

3.2. Importance of Cash flow Analysis:

The objective is cash flow situation to provide necessary information for internal users,
such as shareholders, managers and employees, as well as for external users such as suppliers,
financial creditors and customers, that information regarding current and future capacity
assessment of a firm to generate Cash or cash equivalent.

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Cash flow allows dynamics analysis of financial balance by describing mining

operations, investment and financing, thus obtaining a true picture of the changing financial
position of an enterprise during the period. It shows the cash flows resulting from the three
activities performed at an enterprise (operating, investing, financing) and can be determined by
two methods:

- direct method, which shows all receipts and payments flows for the three typesof
activities,

- indirect method, which shows the operational flow starting from the net result of
the exercise, which is corrected with changes registered capital, as well as adjustments
for non-cash items and other items included in investment and financing activities.

3.3 Advantages of Cash flow Analysis:

❖ Cash flow analysis of Cash Flow Statements help in knowing the liquidity / actual cash
position of the company which funds flow and P&L are unable to specify.

❖ It provides Information about an firm’s capacity to meet its obligations as they become
owed.
❖ The statement allows users to read why assets and liabilities are increased and decreased
during an accounting period.

3.4. Disadvantages of Cash flow Analysis

❖ One of the basic potential disadvantages of cash flow analysis is that it only provide
information about the past business operations and it does not take into matter about
future growth of the business.
❖ Another disadvantage of analysis of cash flows is that interpreting data may be sometime
will be difficult. You can see where the cash is invested but cannot be sure that if the cash
should be invested there or not.

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CHAPTER 4:
CASE STUDY AND DATA COLLECTION

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4.1. Company Profile:

Odisha Power Generation Corporation on November 14, 1984, started as a wholly owned
Government Company of the State of Odisha with the main objective of establishing, operating
and maintaining large thermal power generating stations. As its maiden venture, the company has
set up two thermal power plants with a capacity if 210 MW each in the lb valley area of
Jharsuguda District of Odisha (lb Thermal power Station) at a cost of Rs.11350 million. The
locational advantage of the power plant lies in its close proximity to the coal mines as well as to
the Hirakud reservoir.This gives the company the district advantage of low cost of Raw Materials
leading to low cost generation.

It has also undertaken the construction of seven Mini Hydel stations having a total
capacity of 5075 KW as a technological demonstration.

The entire generation from these units id committed to GRIDCO on the basis of a long
term Power Purchase Agreement. Payment is secured through an Escrow Account and revolving
Letter of Credit.

Shareholder Percentage No. of shares

Govt. of Odisha 51 25,00,109

AES India Pvt. Ltd. 16.25 7,96,178

AES OPGC Holding (incorporated in 32.75 16,05,887

Mauritius)

Total 100 49,02,174

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4.2. Data Collection:

FINANCIAL HIGHLIGHTS

(In Lakhs)
Financial Performance 2017-18 2016-2017 2015-2016

Revenue 62,311.60 75809.00 70595.39

PBDIT 3,407.24 13795.77 20,007.92

Depreciation & Amortization 2,528.35 2559.52 24,878.86

PBT 858.90 11236.25 17815.87

Taxes 379.84 4443.35 6333.22

PAT 479.06 6792.91 11482.65

Per Share Data 2017-18 2016-2017 2015-2016

EPS 4.36 130.44 234.24

Book Value 1716.83 2176.82 3209.94

Dividend Per Share Nil 17.41 65.00

Financial Position 2017-18 2016-2017 2015-2016

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Share Capital 158,049.74 97521.74 49071.74

Net worth 271,344.63 212287.57 157356.79

Total Debt 548,040.93 378681.12 162570.33

Tangible Assets 33,770.29 23277.48 21213.32

Intangible Assets 765.91 804.48 73.83

Cash And Investments 64,632.89 40140.55 50147.62

Currents Assets 68,215.77 77244.72 102880.40

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BALANCE SHEET AS AT MARCH 31,2018

PARTICULARS Note As at March As at March As at March
no. 31,2018 31,2017 31,2016
ASSETS
1. Non-current assets
1) Property, Plant and
Equipment 5 33,770.29 23,277.48 19,732.10
2) Capital work-inprogress-
Tangible 5 753,089.09 594,665.59 332,939.00
3) Other Intangible assets 6 765.91 804.48 73.83
4) Intangible assets under
development 7 - - 614.52
5) Financial assets
i)Investments
ii)Loans and 8 14,965.97 10,200.00 2.55
Advances iii)Others
6) Other non-current 9 551.32 556.06 387.84
assets - -
2. Total non-current assets 10 28,222.08 87,083.49 60,253.84
Current assets
a)Inventories 831,384.66 716,587.10 414,003.68
b)Financial Assets
i)Trade receivables 11 4,413.79 4,268.55 4,877.57
ii)Cash and cash
equivalents iii)Bank
12 9,850.45 12,775.74 9,014.58
balance other than (ii)
above iv)Loans
v)Others 13 6,769.14 15,533.24 25,823.79
c)Current Tax Assets
(Net) 13 42,563.75 14,407.31 24,323.83
d)Other current assets Total 182.98 609.70 9,736.08
Current Assets 14 993.85 25,420.02 27,741.75
15
TOTAL ASSETS 16 2,391.49 2,924.47 2,935.31
17 1,050.31 1,305.69 1,498.93
EQUITY AND
68,215.76 77,244.72 105,951.84
LIABILITIES
Equity
899,600.42 793,831.82 519,955.52
a)Equity Share Capital
b)Other Equity

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158,049.74 97,521.74 49,021.74

1. Total equity 18 112,980.85 114,765.83 111,513.91
LIABILITIES 19
Non- current liabilities 271,030.59 160,535.65
212,287.57

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a)Finzzancial liabilities
i)Borrowings ii)Other 20 548,040.93 378,681.12 162,141.26
financial liabilities
b)Provisions 21 1,123.18 511.76 725.87
c)Deferred tax liabilities 22 5,974.83 3,829.39 3,863.98
2. (Net)
23 590.23 1,342.41 1.131.28
Total non-current
Liabilities 555,729.17 384,364.68 167,862.39
Current liabilities
a)Financial Liabilities
i)Trade and other
payables ii)Other
financial liabilities 24 8,418.34 6,766.84 9,288.53
b)Other current liabilities
25
c)Provisions 26 61,888.54 187,841.88 181,036.83
d)Current Tax Liabilities
999.86 1,907.14 1,000.88
(Net) 27 1,320.67 173.16 231.24
Total Current Liabilities
16 213.24 490.56 -
TOTAL EQUITY AND
72,840.65 197,179.57 191,557.48
LIABILITIES
899,600.42 793,831.82 519,955.52

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STATEMENT OF CASH FLOW FOR THE YEAR ENDED MARCH 31,2018

(In Lakhs)
PARTICULARS As at March Year ended Year ended
31,2018 March 31, 2017 March 31, 2016
(A)Cash flows from operating
activities: Profit before taxes 703.00 11,236.25 18,308.70
Adjustments for:
Depreciation and amortization expense 3,207.25 1,452.95 2,192.05
Provision for impairment - 1,106.57 -
Profit/Loss on sale of fixed assets 14.87 15.15 (2.53)
Trade Receivable written off 23.00
Foreign currency fluctuations gain/(loss) (0.20)
Interest and finance charges 19.99 (0.20) (0.95)
Interest income from investment and 977.19 465.42
deposits (1,521.08)
CSR expenditure 142.35 (3,291.05) (7,479.57)
324.33 268.34
Operating profit before working capital
changes 2,745.28
11,821.19 13,751.46
Adjustments for:
Trade receivable 2,902.29
Inventory (145.94) (3,785.20) (4,644.92)
Other financial assets 24,594.66 637.47 1,052.94
Trade and other payables 3,622.25 9,981.05 52,640.58
Other financial and non-financial liabilities (2560.23) 3,284.86
(125,878.54)
5,214.87 1,07,464.49
Cash generated from operations
Taxes paid (92,160.00)
CSR expenditure (926.56) 21,309.15 173,549.41
(142.35) (3,730.34) (7471.86)
(324.33) (268.94)
Net cash flow from operating activities
(93,228.91)
17,254.48 165,809.21
(B)Cash flow from investing activities:
Payments for purchase of fixed assets
Sale of property, plant and equipment
Interest received
Payment for Investment (62,882.67)
Repayment of loan and other receivable 0.05
(241,485.61) (200,529.94)
Payment for FD 1,524.10
89.61 541.34
Loans and advances provided (5,100.00)
3,517.60 7,878.11
Dividend including Dividend distribution -
tax (28,156.44)

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1,109.27 (36,474.63)

- (168.22) (43.33)

(3,540.08) (4,425.11)

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Payment towards capital and other

advances (25,785.77) (25,785.77) 2,595.89
Advance payments against leasehold land - (1,101.27) 16,282.84

Net cash used in investing activities (94,614.96) (267,346.48) (214,174.83)

(C)Cash flow from financing activities:

Issue of shares 60,528.00 48,500.00 -
Proceeds from borrowings 1,69,359.82 216,515.69 78877.86
Dividends paid to owners of the Company
Interest paid (2,043.49)
Repayment of other financial liabilities (48,764.56) (24,982.12) (11991.78)
(214.11) (214.11) 337.54
Net cash flow from financing activities 239,819.46 67,223.62
Net increase/(decrease) in cash or cash 179,079.76
equivalents (10,290.55) 18,858.01
Cash and cash equivalents at the (8,764.10)
beginning of the year 25,823.79 6,965.78
Cash and cash equivalents at the end of 15,533.24
the year 15,533.24 25,823.79
6,769.14

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CHAPTER 5:
DATA ANALYSIS AND INTERPRETATION

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5.1. Data Analysis and Interpretation:

5.1.1.Analysis of Revenue

Table 1: Net Revenue from Operations in Lakhs

Particulars 2015-16 2016-17 2017-18

Revenue from 62,753.49 72,178.28 60,719.50

Operations

Revenue from Operations

75,000.00
70,000.00
65,000.00
60,000.00 Revenue from Operations

55,000.00
50,000.00
2015-16 2016-17 2017-18

Figure 1

Interpretation: Figure 1 denotes fluctuation of Revenue from operations during the three years
that is 2015-16, 2016-17 & 2017-18. : Revenue from operation of the Company for FY 2017–18
stood at 60,719.50 lakhs as against 72,178.28 lakhs for FY 2016–17 showing a decrease of
around 16%. The revenue is lower in FY 2017–18 mainly due to reduction in quantum of power
sold. The Company has sold 2,511.80 million units of electricity during FY 2017–18 as against
2,885.67 million units in FY 2016–17 with decrease in Plant Load Factor (PLF) from 87.92% in
the previous year to 77.25 % in FY 2017–18.

5.1.2.Analysis of Operating Activity:

Table 2: Analysis of Operating Activity (In Lakhs)

Particulars 2015-16 2016-17 2017-18

Cash from operations 1,10,125.73 21,309.15 (92,159.98)

Cash Operating 7,740.20 4054.67 1068.91

Expenses

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140,000.00
120,000.00
100,000.00
80,000.00
Cash Operating Expenses
60,000.00
Cash from Operations
40,000.00
20,000.00
0.00
2015-16 2016-17 2017-18

Figure 2: Changes in operating activities

Interpretation: Figure 2 denotes comparative weight of cash generated from operating activity
and total cash operating expenses. Total cash operating expenses is total operating expenses net
of depreciation and amortization. Total cash operating expenses includes unpaid expenses. This
figure reflects that total cash from operations is 14.22, 05.25 and 86.21 times more than cash
operating expenses during 2015-16 , 2016-17 & 2017-18 respectively. It is small if compared
with cash from operation. As well as in 2017-18 firm has suffered loss of Rs. 92.15 Lakhs. It
denotes that cash earning is not sufficient.

5.1.3. Analysis of Working Capital Changes:

Table 3: Changes in Working Capital (In Lakhs)

Current Assets 2015-16 2016-17 2017-18

Inventories 4,877.58 4,268.55 4,413.79

Trade Receivables 9,014.58 12,775.74 9,850.45

Cash and cash 25,823.79 15,533.24 6,769.14

equivalents

Bank Balances 24,323.83 14,407.31 42,563.75

Loans & Advances 9,736.08 609.70 182.98

Other financial assets 27,741.75 25,420.02 993.85

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Current Tax Assets 2935.31 2,924.47 2,391.49

(Net)

Other Current Assets 1498.93 1,305.69 1,050.31

Total Current 1,05,951.85 77,244.72 68,215.76

Assets

Current Liabilities

Trade and other 9288.54 6,253.08 8,418.34

payables

Other financial 1,81,036.83 1,87,841.88 61,888.54

liabilities

Other current 1000.88 1,907.14 999.86

liabilities

Provisions 231.24 686.93 1,320.67

Current Tax - 490.56 213.24

Liabilities (Net)

Total Current 1,91,557.49 1,97,179.57 72,840.65

Liabilities

Particulars 2015-16 2016-17 2017-18

Working Capital (85,605.64) (1,19,934.85) (4,624.89)

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Figure 3.1: Changes in Current Assets

70000

60000
50000

40000 2015-16
30000 2016-17
20000 2017-18
10000
0
Trade and other Other financial Other current Provisions Current Tax
payables liabilities liabilities Liabilities (Net)

Figure 3.2: Changes in Current Liabilities

Interpretation: Table 3.1 & 3.2 denotes working capital is negative in all the years. it typically
indicates that the company have incurred a large cash outlay or a substantial increase in its
Financial Liabilities.

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5.1.4. Analysis of Investing Activities:

Table 4: Analysis of Investing Activity (in Lakhs)

Particulars 2015-16 2016-17 2017-18

Inflow Outflow Inflow Outflow Inflow Outflow

Payments for 200,529.94 2,41,485.61 62,882.67

purchase of fixed
assets

Sale of property, 541.34 89.61 0.05

plant and
equipment

Interest 7,857.60 3,517.60 1,524.10

Received

Repayment of 36,474.63 1,109.27 5,100.00

Loan and other
receivables

Loans and 43.33 168.22

Advances provided

Dividend including 4,425.11 3,540.08 28,156.44

Dividend
Distribution Tax

Payment towards 2,595.89 25,785.77 25,785.77

capital and other
advances

Advance payments 16,282.84 1,101.27

against leasehold
land

Total 27,277.67 241,473.01 4,716.48 272,080.95 1,524.15 121,924.88

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300,000.00

250,000.00

200,000.00

150,000.00 Inflow
Outflow
100,000.00

50,000.00

0.00
2015-16 2016-17 2017-18

Figure 4: Inflows and Outflows in Investing activities

Interpretation: Figure 4 indicate the relative weight of cash inflow and cash outflow from
investing activities. During the three years of 2015-16, 2016-17 & 2017-18 cash outflow is 8.85,
57.68 & 79.99 times more than cash inflow. In 2015-16, Cash outflow is mostly associated with
payment for purchase of fixed assets. In 2016-17, cash outflow is also mostly associated with the
payment of purchase of fixed assets and advances. And in 2017-18 cash outflow is associated
with purchase of fixed asset, dividend distribution tax and other advances.

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5.1.4.Analysis of Financing activities

Table 5: Cash flow from Financing activities

Particulars 2015-16 2016-17 2017-18

Inflow Outflow Inflow Outflow Inflow Outflow

Issue of shares - 48500.00 60,528.00

Proceeds from 78,877.86 216,515.69 169,359.82

borrowings

Dividend paid to - 3,540.08 2,043.49

the owners of the
company
Interest paid 11,991.78 24,982.12 48,764.56

Repayment of 337.54 214.11

other financial
liabilities

Total 79,215.40 11,991.78 265,015.69 28,522.20 229,887.82 51,022.16

300,000.00

250,000.00

200,000.00

150,000.00 Inflow
Outflow
100,000.00

50,000.00

0.00
2015-16 2016-17 2017-18

Figure 5: Cash inflow and Outflow from Financing activities

Interpretation: Figure 5 indicate the proportional weight of cash inflow and cash outflow from
financing activities. During the year of 2015-16 cash inflow is more than cash outflow. Cash
inflow of 2015-16 is associated with borrowings. Cash inflow in 2016-17 is significantly higher

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than the cash outflow. The cash inflow of this year is attributed to issue of shares and borrowings
and cash outflow is primarily associated with Interest and Dividend paid. In 2017-18 cash inflow
is thrice as compared to cash outflow. Cash inflow is marginally associated with issue of shares
and proceed from borrowings cash outflow is primarily associated with payment of Interest,
Dividend and other Financial Liabilities.

5.1.5.Analysis of cash flow from all 3 Activities. Table

6. Cash flow from 3 Activities (In Lakhs)

Figure 6: Cash flow from all activities

Interpretation: Figure 6 shows the comparative weight of cash flow of all 3 activities i.e.,
Operating activities, Investing activities and Financing activities. The net cash flow from
operating activities is decreased by 9.60 times in 2016-17 as compared to 2015-16 and is

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negative in 2017-18 by 1.77 times. Net cash flow used in investing activities is highest among
the 3 years. The lowest cash flow used is in 2017-18 by 2.82 times. Net cash flow from financing
activities is inclined by 28.03% in 2016-17 and declined by 37.53% in 2017-18 as compared with
2015-16. Net cash balance is decreased 1.83 times in 2016-17 and 2015 times in 2017-18.

5.2.CALCULATION OF FEW CASH FLOW RATIOS

5.2.1. Cash Flow Coverage Ratio

Cash Flow Coverage Ratio = Operating Cash Flows / Total Liabilities

(In Lakhs)
Particulars/Years 2017-18 2016-17 2015-16
Cash flow from 93,228.89 17254.48 165809.21
operations
Total Liabilities 899,914.46 793,831.82 359468.38
Cash flow coverage Ratio 0.10 0.02 0.46

Table 5.2.1

Interpretation:

The cash flow coverage ratio analysis says more than one is a good ratio as that specify the
company’s fund is more than its current liabilities. This 3 years’ cash flow coverage ratio of
OPGC prove that the company doesn’t have enough cash to meet its liabilities. In 2015-16, it has
the largest ratio comparable to all other years. In the year 2016-2017, it has the lowest ratio.
OPGC shows weak liquidity position and does not have good financial health to meet its
obligations.

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Cash flow coverage ratio

0.5
0.45
0.4
0.35
0.3
0.25
Cash flow coverage ratio
0.2
0.15
0.1
0.05
0
2017-18 2016-17 2015-16

Figure 5.2.1

5.2.2. Cash Flow Margin Ratio

The Formula of Cash flow Margin Ratio:

Operating Cash Flow Margin = Cash Flow from Operating Activities / Revenue
Particulars/Years 2017-18 2016-17 2015-16
Cash flow from operations 93,228.89 17254.48 165809.21

Revenue 62,311.60 75809.00 70595.39

Cash flow Margin Ratio 149.61% 22.76% 234.87%

Table. 5.2.2

Interpretation:

The cash flow margin ratio tells a company how well it converts sales to cash. The higher the
percentage, the more cash is available from sales For the year 2015-16, OPGC has the highest
cash flow margin ratio of 234.87% in 2015-16 and the second highest FY is 2017-18 with
149.61%.

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Cash Flow Margin Ratio

250.00%

200.00%

150.00%

Cash Flow Margin Ratio

100.00%

50.00%

0.00%
2017-18 2016-17 2015-16

Figure 5.2.2

5.2.3. Current Liability Coverage Ratio

Current Liability Coverage Ratio = Net Cash from Operating Activities / Average Current
Liabilities
Particulars/Years 2017-18 2016-17 2015-16
Cash flow from operations 93,228.89 17254.48 165809.21

Average Current Liabilities 135,010.11 194368.52 136136.15

Current Liability Coverage 0.69 0.08 1.21

Ratio
Table 5.2.3

Interpretation:

In calculation of current liability coverage ratio, generally a ratio of 1 : 1 is considered very

comfortable because having a ratio of 1 : 1 means the business is able to pay all of its current
liabilities from the cash flow of its own operations. In FY 2015-16, this year OPGC generated
more cash that can be used to cover debts that need to be paid within a years’ time in
comparision with 2016-17 and 2017-18.

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Current liability coverage ratio

1.4

1.2

0.8
Current liability coverage ratio
0.6

0.4

0.2

0
2017-18 2016-17 2015-16

Figure 5.2.3

5.2.4. Cash Generating Power Ratio

Cash Generating Power Ratio = CFO / (CFO + Cash from Investing Inflows + Cash from
Financing Inflows)
Particulars/Years 2017-18 2016-17 2015-16
Cash flow from operations 93,228.89 17254.48 165809.21

Cash from Investing 1,524.15 4716.48 27298.18

Inflows

Cash from Financing 229,617.81 265015.69 79215.4

Inflows

Cash Generating Power 0.28 0.06 0.60

Ratio
Table 5.2.4

Interpretation:

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In calculation of Cash Generating power Ratio, higher the ratio higher the ability to generate cash
from its operations. From all the 3 years’ FY2015-16 has the highest ratio which means that year
generated much cash from its operation and the lowest ratio is 0.06 i.e., of 2016-17.

Cash generating power ratio

0.7

0.6

0.5

0.4

Cash generating power ratio

0.3

0.2

0.1

0
2017-18 2016-17 2015-16

Figure 5.2.4

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CHAPTER 6:
CONCLUSION

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6.1. Findings:
1. OPGC during the period of Analysis has raised additional fund from issue of equity shares
and marginally and borrowings to finance the working capital and expansion of the
business.
2. Most of the funds is utilized for purchasing fixed assets for expansion of power plants
3. The business firm has shown negative working capital but is still sustainable in long term
period but currently it is facing a short term uncertainty.
4. During the period of analysis, business firm is facing a liquidity crunch indicating
inadequate cash flow to meet its liabilities
5. Most of the cash flow is associated with external borrowings and payment of fixed assets
which is excessive in nature.

6.2. Conclusions:
Cash flow analysis is significant to recognize weaknesses in business activities that can lead the
company towards liquidity situation. Through cash flow analysis, company can see the
unproductive use of funds as well as to determine and plan for future cash flow. The study
established that cash flow analysis has a huge effect in the working capital of the business which
further affect the future decisions of the company. This study shows a direct relationship of cash
flow statement analysis with the liquidity position of OPGC.

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