Cash Flow Statement

Cash Flow Statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.

The following rules are used to make adjustments for changes in current assets and liabilities, operating items not providing or using cash and non operating items.

• Increase in non-cash current asset are subtracted from net income
• Increase in current liabilities are added to net income
• Decrease in current liabilities are subtracted from net income
• Expenses with no cash outflows are added back to net income (depreciation and/or amortization expense are the only operating items that have no effect on cash flows in the period)
• Revenues with no cash inflows are subtracted from net income
• Non operating losses are added back to net income
• Non operating gains are subtracted from net income

Format of the Cash Flow Statement

• The cash flow statement is divided into three sections:

            o Cash flow from operating activities: shows the results of cash inflows and outflows related to the fundamental operations of the basic line or lines of business in which the company engages. (Example: cash receipts from the sale of goods or services and cash outflows for purchasing inventory and paying rent and taxes.)

            o Cash flow from investing activities: associated with purchases and sales of non-current assets (Example: building and equipment purchases or sales of investments or subsidiaries.)

            o Cash flow from financing activities: associated with financing the firm (Example: selling and paying off bonds and issuing stock and paying dividends)

Operating activities

Operating activities include the production, sales and delivery of the company's product as well as collecting payment from its customers. This could include purchasing raw materials, building inventory, advertising, and shipping the product.

Under IAS 7, operating cash flows include:[14]

·        Receipts from the sale of goods or services

·        Receipts for the sale of loans, debt or equity instruments in a trading portfolio

·        Interest received on loans

·        Dividends received on equity securities

·        Payments to suppliers for goods and services

·        Payments to employees or on behalf of employees

Interest payments (alternatively, this can be reported under financing activities in IAS 7, and US GAAP)

Items which are added back to [or subtracted from, as appropriate] the net income figure (which is found on the Income Statement) to arrive at cash flows from operations generally include:

·        Depreciation (loss of tangible asset value over time)

·        Deferred tax

·        Amortization (loss of intangible asset value over time)

·        Any gains or losses associated with the sale of a non-current asset, because associated cash flows do not belong in the operating section.(unrealized gains/losses are also added back from the income statement)

Investing activities

Examples of investing activities are

·        Purchase of an asset (assets can be land, building, equipment, marketable securities, etc.)

·        Loans made to suppliers or customers

·        Payments related to mergers and acquisitions

Financing activities include the inflow of cash from investors such as banks and shareholders, as well as the outflow of cash to shareholders as dividends as the company generates income. Other activities which impact the long-term liabilities and equity of the company are also listed in the financing activities section of the cash flow statement.

Under IAS 7,

·        Proceeds from issuing short-term or long-term debt

·        Payments of dividends

·        Payments for repurchase of company shares

·        Repayment of debt principal, including capital leases

·        For non-profit organizations, receipts of donor-restricted cash that is limited to long-term purposes

Items under the financing activities section include:

·        Dividends paid

·        Sale or repurchase of the company's stock

·        Net borrowings

·        Payment of dividend tax

Cash flow statement: (Structure)

Particulars
Operating Activities: Cash inflows: From sales of goods or services. From return on loans (interest) and on equity securities. Dividends Cash outflows: To suppliers for inventories. To employees for services. To government for taxes. To lenders for interest. To others for expenses.	Income Statement Items
Investing Activities: Cash inflow: From sale of property, plant and equipment. From sale of debt or equity securities of other entities. From collection of principles on loans to other entities. Cash Outflows: To purchase property, plant and equipment. To purchase debt or equity securities of other entities. To make loans to other entities.	Generally Long Term Asset Items
Financing Activities: Cash inflows: From sale of equity securities. From issuance of debt (bonds and notes). Cash outflows: To stock holders as dividends To redeem long term debt or reacquire capital stock.	Generally Long term Liability and Equity Item

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Name of the Company

Indirect Method

Statement of Cash Flows

For the Ended December 31, 2010

Statement of Cash Flows

Amount(Taka)

Cash Flow from Operating Activities Net Income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization                                                  Changes in other accounts affecting operations: (Increase)/decrease in accounts receivable (Increase)/decrease in inventories (Increase)/decrease in prepaid expenses Increase/(decrease) in accounts payable Increase/(decrease) in taxes payable Net cash provided (Used) by operating activities Cash Flow from Investing Activities Capital expenditures  Proceeds from sales of equipment Proceeds from sales of investments Investments in subsidiary  Net cash provided(Used)by investing activities Cash Flow from Financing Activities Payments of long-term debt Proceeds from issuance of long-term debt Proceeds from issuance of common stock Dividends paid  Purchase of treasury stock Net cash provided by financing activities Increase (Decrease) in Cash

XXX,XXX XX,XXX X,XXX X,XXX X,XXX X,XXX X,XXX   XXX,XXX (XXX,XXX) XX,XXX XX,XXX (XXX,XXX)   (XXX,XXX) (XX,XXX) XX,XXX XXX,XXX (XX,XXX) (XX,XXX)   (XX,XXX)   XX,XXX

Particular	2008	2007	2006
Net income Operating activities, cash flows provided by or used in: Depreciation and amortization Adjustments to net income Decrease (increase) in accounts receivable Increase (decrease) in liabilities (A/P, taxes payable) Decrease (increase) in inventories Increase (decrease) in other operating activities Net cash flow from operating activities Investing activities, cash flows provided by or used in: Capital expenditures Investments Other cash flows from investing activities Net cash flows from investing activities Financing activities, cash flows provided by or used in Dividends paid Sale (repurchase) of stock Increase (decrease) in debt Other cash flows from financing activities Net cash flows from financing activities Effect of exchange rate changes Net increase (decrease) in cash and cash equivalents	21,538 2,790 4,617 12,503 131,622 -- (173,057) 13 (4,035) (201,777) 1,606 (204,206) (9,826) (5,327) 101,122 120,461 206,430 645 2,882	24,589 2,592 621 17,236 19,822 -- (33,061) 31,799 (3,724) (71,710) 17,009 (58,425) (9,188) (12,090) 26,651 27,910 33,283 (1,840) 4,817	17,046 2,747 2,910 -- 37,856 -- (62,963) (2,404) (3,011) (75,649) (571) (79,231) (8,375) 133 21,204 70,349 83,311 731 2,407