Presentation of Statements of Cash Flows A statement of cash flows prepared under the terms of IAS 7 separates: Operating activities Investing activities – covering capital expenditure, acquisitions and disposals, equity dividends paid, interest received, dividends received Financing activities – covering proceeds from issuing shares, other equity instruments, debentures and other loans, principal lease payments, dividends paid. Note that interest and taxation paid are treated as part of operating activities.
Overall presentation of a Cash Flow Statement Cash flows from operating activities X Cash flows from investing activities X Cash flows from financing activities X Increase/decrease in net cash and cash equivalent X Cash and cash equivalent at the start of the yearX Cash and cash equivalent at end of the yearX
Operating Activities (Direct) Cash received from customers X Cash payment to suppliers(X) Cash paid to and on behalf of employees(X) Interest paid(X) Income taxes paid(X) Net cash inflow from operating activities X
Operating Activities (Indirect) Operating Activities Profit before taxX Adjustments for : DepreciationX Profit/loss on sale of assetsX InterestX AmortizationX X Increase/decrease in trade receivables X Increase/decrease in inventoryX Increase/decrease in trade payablesX Cash generated from operationsX Interest paidX Income taxes paidX Net cash inflow/outflow from operating activitiesX
Cash flows from Investing activities Cash inflows from investing activities include : Interest received in cash terms Dividends received in cash terms Proceeds from the sale of non-current assets Cash outflows from investing activities include : Payment made for the purchase of non-current assets such as property, plant and equipment Payments made for the acquisition of subsidiaries
Cash flows from Financing activities Cash inflows include : Proceeds from the issue of share capital Proceeds from long term borrowings Cash outflows include : Payment of finance lease liabilities Payment of owners to acquire or redeem shares Repayments of a mounts borrowed other than finance leases Equity dividend paid