Assignment 01 (10 May 2021)
https://www.massmart.co.za/iar2019/wp-content/uploads/Massmart_AFS_2019.pdf
1.1 Cash flow from operations (5 marks)
Dec 2019 Dec 2018
Cash inflow from trading activities 36.1 4,296.8 3,411.3
Working capital movements 36.2 (82.0) (545.8)
Cash generated from operations 4,214.8 2,865.5
Finance costs paid (1,776.0) (508.0)
Finance income received 61.3 25.1
Dividends received 20.0 34.0
Taxation paid 36.3 (191.1) (324.6)
Dividends paid (162.4) (750.0)
Net cash inflow from operating
activities 2,166.6 1,34
The cash flow under operating activities shows that Massmart has increased in their overall Cash
flow from Operating Activities.
The cash flow from increased by 885.5 from the 2018 financial year to the 2019 financial
year
The working capital decreased 463.8 from the 2018 financial year to the 2019 financial
year this means the capital Massmart used in its day-to-day trading operations was
significantly less in the 2019 Financial year
This resulted in an overall cash generated by Massmart from its day to day Trading
operations, the increase was 1,349.3 from the 2018 to the 2019 financial year.
Finance costs are usually understood to be referred to interest costs. Usually they are
thought to refer to interest expense on short-term borrowings (for example bank overdraft
and notes payable) and long-term borrowings (for example term loans and real estate
mortgages).
The finance cost increased by 1,268 this is not a good thing because it means the interest
paid on short and long term borrowings has increased significantly.
The taxation paid decreased significantly, which is a good saving for Massmart and is
increasing the overall cash flow.
Dividends paid was decreased significantly 587
1.2 Cash flow from investing activities
Investment to maintain operations 36.4 (580.3) (772.4)
Investment to expand operations 36.5 (791.5) (833.6)
Proceeds on disposal of property, plant and equipment 7.9 20.4
Proceeds on disposal of non- current assets classified as held for sale 36.6 41.3 32.8
Other net investing activities 11.3 5.9
Net cash outflow from investing activities (1,311.3) (1,546.9)
negative cash flow from investing activities might be due to significant amounts of cash
being invested in the long-term health of the company, such as research and
development.
The overall negative figure from Net cash decreased 235.6 which is a positive indication
from 2018 to 2019 financial year.
1.3 Cash flow from Financing activities
crease/(Decrease) in non-current liabilities1 36.7 600.0 (583.7)
(Decrease)/Increase in current liabilities1 36.7 (2,613.4) 1,043.5
Net acquisition of treasury shares (48.4) (221.1)
Net cash outflow/(inflow) from financing activities (2,061.8) 238.7
The was a significant increase in the current Liabilities from financing activities which is not a
good sign, this resulted in cash outflow from financial activities.
Over All conclusion
As operating cash flow beings with net income, any changes in net
income would affect cash flow from operating activities. If revenues decline or costs
increase, with the resulting factor of a decrease in net income, this will result in
a decrease in cash flow from operating activities.
2.
2.1. Compile a vertical and horizontal analysis and comment on your findings
Dec 2019 Dec 2018
Rm 52 weeks 52 weeks
Revenue 93,843.1 91,180.6
Sales 93,660.0 90,941.6
Cost of sales (75,946.8) (73,250.4)
Gross profit 17,713.2 17,691.2
Other income 179.7 231.0
Depreciation and amortization (3,067.1) (1,134.6)
Employment costs (8,188.0) (7,582.9)
Occupancy costs (1,365.8) (3,491.3)
Other operating costs 4,160.8) (3,644.5)
Trading profit before interest and taxation 1,111.2 2,068.9
Reorganization and restructuring costs (33.1) (161.0)
Impairment of assets (229.5) (21.4)
Insurance proceeds on items of PP& 3.4 8.0
Operating profit before foreign exchange 852.0 1,894.5
Foreign exchange loss (143.0) (2.7)
Operating profit before interest 709.0 1,891.8
– Finance costs (1,860.4) (648.8)
– Finance income 61.3 25.1
Net finance costs (1,799.1) (623.7)
(Loss)/Profit before taxation (1,090.1) 1,268.1
Taxation 8 (206.3) (399.4)
(Loss)/Profit for the year (1,296.4) 868.7
Profit attributable to:
– Owners of the parent 1,307.5) 888.6
– Non-controlling interests 11.1 (19.9)
(Loss)/Profit for the year (1,296.4) 868.7
Earnings per share (cents) 10
Basic EPS (600.6) 410.6
Diluted basic EPS (594.9) 401.9
