Statement of Cash Flows LKAS 7 Presented By

Statement of Cash Flows LKAS 7 Presented By Group 5

SCOPE • An entity shall prepare a statement of cash flows in accordance with the requirements of this Standard and shall present it as an integral part of its financial statements for each period for which financial statements are presented. 2

OBJECTIVE • The objective of this Standard is to require the provision of information about the historical changes in cash and cash equivalents of an entity by means of a statement of cash flows which classifies cash flows during the period from operating, investing and financing activities. 3

Statement of Cash Flows Describes the sources of an entity's cash** and how that cash was spent or received (movement) over a specified time period. 4

Cash & Cash Equivalent • Cash – cash on hand demand deposits • Cash Equivalent – Short term highly liquid investments which can be readily converted into cash 5

Classification of items in the Cash Flow Statement • Operating Activities – The principal revenue generating transactions and other activities which are not part of investing or financing activities • Investing Activities – Acquisition and disposal of long term assets and other investments • Financing Activities – Activities that result changes in equity and debt 6

Methods for Preparing a Cash Flow Statement 1. Direct Method 2. Indirect Method cashflow. xlsx – Hyperlink 7

Importance to Users • Identify the sources where cash inflows occurred • provides relevant information in assessing a company's liquidity, quality of earnings and solvency. • Helps management in proper cash planning. • Shows the efficiency of a company in generating cash inflows from its regular activities. • helps for appraisal of various capital investment programmes to determine their profitability and viability • Regulatory compliance** 8

Limitations of Cash Flow Statement • Prepared on cash basis rather than on accrual basis (Non-cash transactions are ignored) • Not a substitute for Income statement • Provides historical information • Does not present the actual liquidity position of an entity 9

Interpretation of the Cash Flow Statement • Cash from operations – company’s ability to generate cash internally, through its core business activities • Cash from investing activities – If a company can fund its capital expenditure through cash generated from operations, it is a good sign • Cash from financing activities – shows whether the company required external funding and how much dividends have been paid out. 10

DISCLOSURES 11

THANK YOU!! 12