12.
8
ANALYSIS OF THE
CASH FLOW
STATEMENT
Cash Flow Statement for the month ended 30 June 2015
$
Cash Flows from Operating Activities
Cash sales
50000
Receipts from debtors
10000
GST collected
Cash purchases of stock
Advertising
Investing
Activities
Wages
(30000)
(3000)
(14000)
Cleaning
(3000)
GST paid
(4000)
Net Cash Flow from Operating
Activities
11000
Financing
Activities
Cash Flows from Investing Activities
Closing
Section
Sale of office equipment
2000
Sale of furniture
4500
Purchase of computer
Operating
Activities
5000
(3000)
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Cash Balance
Operati
ng
Investin
g
Financi
Cash
ng
Inflows
Money comes
into the
business from 3
sources
Cash comes in from
selling
goods and
Non Borrowings
services:
Current
Assets:
(loans)
Property
Cash
sales
Capital
Debtor
Vehicles
contributions
collections
Equipment
Cash
Outflows
Money leaves
the business in
3 ways
GST received
Cash is spent on
running
buying
the
Loan Nonbusiness
Current
Assets
on a
repayments
daily
basis
Property
Drawings
Wages
Vehicles
Creditor
Equipment
payments
Michael Allison, Trinity Grammar School.
Authors
permission required for external use
Stock
purchases
Operati
ng
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Net Cash
Inflow
Net Cash
Outflow
Operati
ng
Activiti
es
Investi
ng
Activiti
es
Financi
ng
Activiti
es
Michael Allison, Trinity Grammar School.
Authors permission required for external use
The business has
cant
been able
generate
generated
raised
spent
money
money
to
net
cashon:
on
cash
by
Repaying
generate
from
selling
non-current
from:
its nonday-to-day
net
loans
cash
to
from
operations
current
assets
Borrowing
the
its day-to-day
assets
bank from
Drawings
operations
banks
to the
will
It
This
Capital
owner(s)
ishave
good
to get
This
money
because
contributions
canfrom:
be
it may
these
spent
will
have
from
on:
sold
be
This
Selling
used
isunproductive
good
the
to nonowner(s)
current
assets
generate
because:
Buying future
nonassets
The
revenues
This
current
Borrowing
is firm
not and
has
assets
cash
reduced
But
sustainable
Loan
money
this is also
its bad
debt
Interest
as
because:
repayments
Capital
it is not
expenses
sustainable
Drawings
contributions
The
firm has
will be
because:
increased its
lower
The
debtowners
assets sold
have
made
wont must
Loans
money
generate
be
future
repaid
from
thecash
with
business
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Ideally
Operati
ng
Cash Balance
OPERATING
ACTIVITIES
Investin
g
Financi
ng
INVESTING
ACTIVITIES
FINANCING
ACTIVITIES
Michael
Allison, Trinity Grammar School.
Authors permission required for external use
Operati
ng
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Situation
#1
Operati
ng
Cash Balance
OPERATING
100,000
ACTIVITIES
Investin
g
Financi
ng
INVESTING
(60,000)
ACTIVITIES
FINANCING
(20,000)
ACTIVITIES
Michael Allison, Trinity Grammar School.
Authors permission required for external use
Operati
ng
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Situation
#2
Operati
ng
Investin
g
Cash Balance
OPERATING
100,000
ACTIVITIES
FINANCING
40,000
ACTIVITIES
Financi
ng
INVESTING
(130,000)
ACTIVITIES
Michael Allison, Trinity Grammar School.
Authors permission required for external use
Operati
ng
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Situation
#3
Operati
ng
Cash Balance
OPERATING
100,000
ACTIVITIES
INVESTIING
60,000
ACTIVITIES
Investin
g
Financi
ng
FINANCING
(150,000)
ACTIVITIES
Michael Allison, Trinity Grammar School.
Authors permission required for external use
Operati
ng
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Situation
#4
Operati
ng
Cash Balance
INVESTIING
30,000
ACTIVITIES
Investin
g
FINANCING
30,000
ACTIVITIES
Financi
ng
OPERATING
(50,000)
ACTIVITIES
Michael Allison, Trinity Grammar School.
Authors permission required for external use
Operati
ng
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Enron Net Profit ($m)
979
1,000
Went bankrupt in 2001
900
893
800
703
700
600
500
440
489
493
400
300
200
105
100
-
1994
1995
Michael Allison, Trinity Grammar School.
Authors permission required for external use
1996
1997
1998
1999
2000
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Enron Net Cash Flows ($m)
6,000
4,779
Operating
Activities
($m)
4,000
1,849 1,640
2,000
884
331
2,456
2,266
1,228
571
211
1996
-2,000
1997
1998
1999
2000
-1,074
Financing
Activities
($m)
-2,146
-4,000
-6,000
Investing
Activities
($m)
-3,965
-3,507
Michael Allison, Trinity Grammar School.
Authors permission required for external use
-4,264
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Lehman Brothers Net Profit ($m)
4,500
Went bankrupt in 2008
4,000
3,500
4,192
3,941
3,260
3,000
2,369
2,500
2,000
1,500
1,699
1,255
975
1,000
500
-
2001
2002
Michael Allison, Trinity Grammar School.
Authors permission required for external use
2003
2004
2005
2006
2007
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
60,000
Lehman Brothers Net Cash Flows ($m)
48,592
20,000
-20,000
-40,000
Operating
Activities
($m)
38,255
40,000
12,112
2005
-447
2006
-792
2007
-1,698
-12,205
Financing
Activities
($m)
-36,376
-45,595
-60,000
Investing
Activities
($m)
Michael Allison, Trinity Grammar School.
Authors permission required for external use
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
ABC Learning:
Founded by Eddie Groves
Grew from one childcare centre
in 1988
At its peak, ABC Learning was
opening up four new centres per
week
Michael Allison, Trinity Grammar School.
Authors permission required for external use
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
ABC Learning No. of centres at year end
2,500
2,238
2,000
1,500
1,257
1,000
660
500
43
94
2001
2002
187
327
2003
2004
2005
Michael Allison, Trinity Grammar School.
Authors permission required for external use
2006
2007
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
ABC Learning Net Profit ($m)
160.0
Went bankrupt in 2008
143.1
140.0
120.0
100.0
81.0
80.0
52.3
60.0
40.0
20.0
3.3
6.8
2001
2002
12.1
21.4
2003
2004
2005
Michael Allison, Trinity Grammar School.
Authors permission required for external use
2006
2007
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
Michael Allison, Trinity Grammar School.
Authors permission required for external use
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
How could ABC Learning go broke in 2008 when its profi ts
and cash were growing?
160.0
143.1
140.0
123.1
120.0
100.0
81.0
80.0
60.0
52.3
88.0
Net
Increase/
Decrease
in Cash
($m)
45.7
40.0
20.0
-
2005
2006
Michael Allison, Trinity Grammar School.
Authors permission required for external use
Net Profit
($m)
2007
12.8 ANALYSIS OF THE
CASH FLOW STATEMENT
ABC Learning Net Cash Flows ($m)
2,000.0
1495.6
1,500.0
850.1
1,000.0
456.5
500.0
-
-1,000.0
206.9
89.2
43.2
2005
-500.0
2006
Financing
Activities
($m)
-454.0
-851.3
-1579.4
Michael Allison, Trinity Grammar School.
Authors permission required for external use
Investing
Activities
($m)
2007
-1,500.0
-2,000.0
Operating
Activities
($m)
TASK
In-class
Ex12.7
X
X
Ex12.8
Ex12.9
X
X
Ex12.10
Case
study
Homewo
rk
Michael Allison, Trinity Grammar School.
Authors permission required for external use
