Consolidated Cash Flow Statement

Urooj SheikhUmaima Siqqidui

Farah AhmedSahrish Darjat

A company’s ability to generate future net cash inflows from operations to pay debts, interest and dividend.

A company’s need for external financing. The reasons for differences between net

income and net cash flow from operating activities.

The effect of cash and non cash investing and financing transactions.

Objective of cash flow statement IAS 7

A statement of cash flows is an important document that investors keep a close eye on.

The report draws its significance from the fact that it provides data about a firm's solvency --- that is, its ability to pay debts.

To investors and financial-market players, it's important that corporate management shows that the company doesn't put all its eggs in one basket --- in other words, corporate business lines diversify their investments in various economic sectors.

Significance

These are the principal revenue producing activities such as sales and purchases of goods and services

These are activities usually deal with current assets and current liabilities

Income tax paid is the operating activity

Operating Activities

These activities deal with sales and purchases of fixed assets and other long term investments

Dividend and Interest received on investment are the investing activities because they are the return on investment

Investing Activities

These activities deal with shareholder’s (owner’s) equity and long term liabilities

Dividend and interest paid is the financing

activity because they are costs of obtaining financial resources.

Financing Activities

The main difference between the direct method and the indirect method involves the cash flows from operating activities, the first section of the statement of cash flows. (There is no difference in the cash flows reported in the investing and financing activities sections.)

Under the direct method, the cash flows from operating activities will include the amounts for such as cash from customers and cash paid to suppliers.

Difference between direct and indirect method.

Operating Activities: Current Assets Increase Cash outflow Current Assets Decrease Cash Inflow Current Liabilities Increase Cash Inflow Current Liabilities Decrease Cash Outflow

Direct Method

Investing Activities: Fixed Assets Increase Cash Outflow Fixed Assets Decrease Cash Inflow

Financing Activities: Long term liabilities increase Cash Inflow Long Term liabilities decrease Cash Outflow Share Capital Increase Cash Inflow Share Capital Decrease Cash Outflow

Current assets and liabilities changes – other than cash.

We calculate : 1. Net Income2. Non- Cash Items3. Other Income – Extra ordinary4. Current Assets and Liabilities

Indirect Method

Searl CompanyConsolidated Cash Flow

for the year ended june 30, 2009