Lecture 2: Statement of Cash Flows
Self-study exercises: model answers
Exercise 1: Free Ltd

Free Ltd | Statement of Cash Flows for the year ended 31st March 2013 | | | | | | | | | | | | | | £m | | £m | | | | | | | | | Cash from operating activities | | | | | Profit before tax | | | | | 232 | Adjustments for | | | | | | | Depreciation | | | 190 - 145 | | 45 | | Interest expense | | | | | 24 | Operating profit before working capital changes | | 301 | | Increase in inventory | | 418 - 315 | | (103) | | Increase in trade receivables | | 438 - 412 | | (26) | | Increase in trade payables | | 166 - 139 | | 27 | Cash generated from operations | | | | 199 | | Interest paid | | | | | (24) | | Tax paid | | | | 39 + 48 -45 | | (42) | Net cash from operating activities | | | 133 | | | | | | | | | Cash flows from investing activities | | | | | Purchase of PPE | | | 720 - 540 | | (180) | | Purchase of Investments | | | 140 - 115 | | (25) | Net cash used in investing activities | | (205) | | | | | | | | | Cash flows from financing activities | | | | | Issue of share capital | (800+55)-(600+40) | | 215 | | Repayment of debentures | | | | | (50) | | Dividend paid | | | | | (90) | Net cash from financing activities | | | 75 | | | | | | | | | Net Increase in cash and cash equivalents | | 3 | Cash and cash equivalents at beginning of year | | 48 | Cash and cash equivalents at end of year | | | 51 |

Exercise 2: Martel plc

Martel Plc
Statement of Cash Flows
Year ended: 31st December 2012 £m
Cash flows from operating activities
Net profit before tax 427
Adjustments for
Depreciation 292
Profit on sale of plant (8)
Interest expense 52