From the following information of Banjara Ltd., prepare a Cash Flow Statement (figures in ₹ thousands).
Balance Sheet of Banjara Ltd.
| Particulars | Note No. | 31st March 2017 (₹) | 31st March 2016 (₹) |
|---|---|---|---|
| I. Equity and Liabilities | |||
| 1. Shareholders' Funds — a) Share capital | 1,500 | 1,250 | |
| b) Reserve and surplus (surplus) | 3,410 | 1,380 | |
| 2. Non-current Liabilities — 10% Long-term loan | 1,110 | 1,040 | |
| 3. Current Liabilities — a) Trade payables | 150 | 1,890 | |
| b) Other current liabilities | 1 | 630 | 1,100 |
| Total | 6,800 | 6,660 | |
| II. Assets | |||
| 1. Non-current assets — a) Fixed assets | 2 | 730 | 850 |
| b) Non-current investments | 2,500 | 2,500 | |
| 2. Current assets — a) Current investments (Marketable) | 670 | 135 | |
| b) Inventories | 900 | 1,950 | |
| c) Trade Receivables | 1,700 | 1,200 | |
| d) Cash and cash equivalents | 200 | 25 | |
| e) Other current assets (Interest receivables) | 100 | — | |
| Total | 6,800 | 6,660 |
Notes to Accounts:
Note 1 — Other Current Liabilities
| Particulars | 31st March 2017 (₹) | 31st March 2016 (₹) |
|---|---|---|
| Interest payable | 230 | 100 |
| Income tax payable | 400 | 1,000 |
| Total | 630 | 1,100 |
Note 2 — Fixed Assets
| Particulars | 31st March 2017 (₹) | 31st March 2016 (₹) |
|---|---|---|
| Tangible | 2,180 | 1,910 |
| Less: Accumulated depreciation | 1,450 | 1,060 |
| Net | 730 | 850 |
Statement of Profit and Loss for the year ended 31 March, 2017
| Particulars | Amount (₹) |
|---|---|
| Revenue from operation | 30,650 |
| Other income | 640 |
| Total Revenue | 31,290 |
| Cost of material consumed | 26,000 |
| Finance cost (interest expenses) | 400 |
| Depreciation | 450 |
| Other expenses (admn. and selling) | 910 |
| Total Expenses | 27,760 |
| Profit before tax | 3,530 |
| Tax | 300 |
| Profit after tax | 3,230 |
Other income comprises Interest Income ₹300, Dividend Income ₹200, and Insurance Proceeds from earthquake disaster settlement ₹140.
Additional Information (₹'000): (i) ₹250 was raised from the issue of share capital and a further ₹250 from long-term borrowings. (ii) Interest expense was ₹400, of which ₹170 was paid during the period; ₹100 relating to interest of the prior period was also paid. (iii) Dividends paid were ₹1,200. (iv) A 10% loan of ₹70 was obtained on March 31, 2017. (v) The enterprise acquired fixed assets for ₹350 in cash. (vi) Plant with original cost of ₹80 and accumulated depreciation of ₹60 was sold for ₹20. (vii) Trade receivables and trade payables include amounts relating to credit sales and credit purchases only.
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Start your 14-day free trial to unlock the full solution →All figures are in ₹ '000. Operating activities generate ₹1,790, investing activities add ₹70, and financing activities use ₹1,150 — a net increase of ₹710, which reconciles cash and cash equivalents from ₹160 at the beginning to ₹870 at the end of the period.
The whole statement is prepared in ₹ '000 (rupees in thousands), exactly as the balance sheet and the statement of profit and loss are presented. We start from profit before tax and the extraordinary item, strip out the non-operating and non-cash items, adjust for working-capital movements, and then track the actual cash moving through investing and financing activities.
Cash Flow Statement of Banjara Ltd. (₹ '000)
| Particulars | Amount (₹) |
|---|---|
| Cash Flows from Operating Activities | |
| Net Profit before Taxation and Extraordinary Item | 3,390 |
| Adjustments for: | |
| Add: Depreciation | 450 |
| Less: Interest Income | (300) |
| Less: Dividend Income | (200) |
| Add: Interest Expense | 400 |
| Operating Profit before working capital changes | 3,740 |
| Less: Increase in Trade Receivables | (500) |
| Add: Decrease in Inventories | 1,050 |
| Less: Decrease in Trade Payables | (1,740) |
| Cash generated from Operations | 2,550 |
| Less: Income Tax paid | (900) |
| Cash flow before Extraordinary Items | 1,650 |
| Add: Proceeds from earthquake disaster settlement | 140 |
| Net cash from Operating Activities | 1,790 |
| Cash Flows from Investing Activities | |
| Purchase of Fixed Assets | (350) |
| Proceeds from Sale of Equipment | 20 |
| Interest Received | 200 |
| Dividends Received (net of TDS) | 200 |
| Net cash from Investing Activities | 70 |
| Cash Flows from Financing Activities | |
| Proceeds from issuance of Share Capital | 250 |
| Proceeds from Long-term Borrowings | 250 |
| Repayment of Long-term Borrowings | (180) |
| Interest Paid | (270) |
| Dividends Paid | (1,200) |
| Net Cash used in Financing Activities | (1,150) |
| Net Increase in Cash and Cash Equivalents | 710 |
| Add: Cash and Cash Equivalents at the beginning of the period | 160 |
| Cash and Cash Equivalents at the end of the period | 870 |
How each figure is worked out (₹ '000)
Net Profit before Tax and Extraordinary Item = ₹3,390. Take profit after tax ₹3,230, add back the tax charge ₹300, and remove the insurance proceeds from the earthquake settlement ₹140 (an extraordinary item that is shown separately lower down): 3,230 + 300 − 140 = 3,390.
Non-operating and non-cash adjustments. Depreciation ₹450 is added back because it is a non-cash charge. Interest income ₹300 and dividend income ₹200 are removed here (they belong to investing activities), and the interest expense ₹400 is added back (it belongs to financing activities).
Working-capital changes. Trade receivables rose from ₹1,200 to ₹1,700, an increase of ₹500 (a use of cash). Inventories fell from ₹1,950 to ₹900, a decrease of ₹1,050 (a source of cash). Trade payables fell from ₹1,890 to ₹150, a decrease of ₹1,740 (a use of cash).
Income tax paid = ₹900. Income tax payable opened at ₹1,000 and the year's tax charge was ₹300; income tax payable closed at ₹400, so tax actually paid = 1,000 + 300 − 400 = 900.
Repayment of long-term borrowings = ₹180. Opening loan ₹1,040 plus fresh borrowing raised ₹250 less the closing balance ₹1,110 = 1,040 + 250 − 1,110 = 180. (The ₹70 10% loan taken on 31 March 2017 is already inside the ₹250 raised and the closing ₹1,110.) …
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