Accounting :An Introduction (5th ed) McLaney and Atrill

The Statement of Cash Flows

The following are the financial statements of Colmar Ltd for last year and this year:

Income statement for the year ended 31 December:

last year this year
£000 £000
Sales revenue 499 602
Cost of sales (335) (423)
Gross profit 164 179
Operating expenses (127) (148)
Operating profit 37 31
Interest payable (13) (22)
Profit before taxation 24 9
Taxation (8) (4)
Profit for the year 16 5

Statement of Financial Position as at 31 December:

last year this year
£000 £000 £000 £000
Non-current assets 110 125

Current assets
Inventories 68 83
Trade receivables 80 96
Cash 6 154 2 181
Total assets 264 306

Equity
Ordinary shares of £0.50 each 13 13
Capital reserves 33 33
Retained profit 84 130 84 130
Non-current liabilities
Borrowings - Loan notes 55 60
Current liabilities
Trade payables 75 114
Taxation 4 79 2 116
Total equity and liabilities 264 306

[Included in operating expenses are the following depreciation charges:

Last year £32,000

This year £36,000

There were no disposals of non-current assets in either year. ]

Dividends were paid of £6,000 and £5,000 during last year and this year respectively.

1
Required:
Prepare a Statement of Cash Flows for this year. Show workings.

Colmar Ltd

Statement of Cash Flows for the year ended 31 December this year
£000 £000
Cash flows from operating activities
Profit before taxation (after interest)
Adjustments for (add back):
Depreciation
Interest expense

Increase in trade receivables

Increase in trade payables
Increase in inventories
Cash generated from operations
Deduct:
Interest paid
Taxation paid ( show working)
Dividend paid
Net cash from operating activities

Cash flows from investing activities

Payments to acquire tangible non-current assets
(show working)
Net cash used in investing activities

Cash flows from financing activities

Issue of loan notes

Net cash from financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at 1 January this year

Cash and cash equivalents at 31 December this year