A.

Cash flow from(used in) operating Activities:

Net profit before tax & Extraordinary items
ADD: Non cash & non Operating Items:
Depreciation on Fixed assets
Loss on sale of fixed assets & investments
Writing off fictitious and intangible assets like preliminary
expenses, discount on issue of shares, goodwill etc.
Premium on redemption of debentures or preference
shares
Interest paid on debentures and long term loans
LESS: Non Cash & Non Operating Incomes:
Profit on sale of fixed assets and investments
Interest received
Dividend received
Rent received

Profit Before WC Changes

Adjustment for changes in Current Assets & Current
Liabilities
ADD: Decrease in CA (except Cash & Cash Equivalents)
Increase in CL (Except Bank Overdraft)
LESS: Increase in CA (except Cash & Cash Equivalents)
Decrease in CL (Except Bank Overdraft
Cash Generated from Operations
Less: Income Tax Paid
Add: Income tax refund
Add/less: Cash flow from extraordinary items

Net Cash Flow (used in) Operating

Activities

Xxxx
x
Xxxx
x
Xxxx
x
Xxxx
x
Xxxx
x
Xxxx
x
(Xxx
xx)
(Xxx
xx)
(Xxx
xx)
(xxxx
x)
----Xxxx
x
Xxxx
x
(XXX
X)
(XXX
X)
------(xxx)
Xxxx
x
xxxx
xx
-----------

B.

Cash flow from(used in) Investing Activities:

ADD: Sale of fixed assets
Sale of long term investments
Interest received(from investments)
Dividend received (from investments)
Rent Received (from assets lent out)
LESS: Purchase of Fixed Assets & long term investments

Xxxx
Xxxx
Xxxx
Xxxx
Xxxx
(xxxx
)
------------

Net Cash Flow (used in) Investing Activities

C.

Cash flow from(used in) Financing

Activities:
ADD: Proceeds from issue of shares
Proceeds from issue o Debentures
Proceeds from Long Term Borrowings
LESS: Repayments of Long Term Borrowings
Interest paid on Debentures and Long Term Borrowings
Dividend Paid
Premium on Redemption of Debentures &Preference
Shares
Redemption of Debentures and Preference Shares

D.

Net Cash Flow (used in) Financing

Activities

-----------

Net Increase or Decrease in Cash & Cash

Equivalents (A+B+C)

-----------

Add: Cash & cash Equivalents-opening Balance

E.

Xxxx
x
Xxxx
x
Xxxx
x
(xxxx
)
(xxxx
)
(xxxx
)
(xxxx
)
(xxxx
)

Cash & cash Equivalents-Closing Balance

NOTES:

(XXXXX
X)
-----------

 Working note: Calculation of Net Profit

before tax & extraordinary Items:
Net profit after tax and extraordinary items + Provision for tax made
during the year + Proposed dividend made during the year + Increase in
general reserve or securities premium + Interim Dividend Refund of Tax
Extraordinary Receipts.

(xxxx) represents Minus Items

Cash & cash Equivalents (Cash + Bank +

Marketable Securities Bank Overdraft)

Extraordinary Items: amount received from insurance

company on account of stock lost by fire, earthquake, floods etc

There are some investing & financing activities which do not require the use
of cash equivalents. Such non cash items should be excluded from cash flow
statement. Example: acquisition of assets by issue of Shares or Debentures,
conversion of debentures into shares, etc

Provision for tax

If given in P/l acc and no adjustment mentioned about tax and provision:add back to working note and deduct from operating activities as tax paid

If given in balance sheet with opening and closing balance and no further
adjustment given then: treat opening balance as tax paid and deduct it
from operating activity and closing balance as provision made and add it
back to working note.

If given in balance sheet and adjustment about tax paid or provision

made is given then make provision for taxation account to find missing
value.

Proposed Dividend: same treatment as for provision for Taxation but the only
difference here is that dividend paid is treated as outflow from financing
activity.

Interim dividend: added back to working note and deducted from financing
activity.

 Provision for doubtful or bad debts: if increasing then add back the difference
to working note and if decreasing then deduct it from working note.

If its written x% of debentures or x% of preference shares, then that x% is the

amount of interest or dividend paid on debentures and preference shares

respectively.
Goodwill: decreasing then add back to working note. If increasing then deduct
from investing activity as purchase.