Preparation of Cash Flow Statement

This document provides a step-by-step guide on how to prepare a cash flow statement for Metropolitan Inc. for the year ended 31st of December 2012. It includes the operating, investing, and financing activities of the company. The document also discusses the importance of maintaining an optimal capital structure and analyzing various options and scenarios that may influence the financial condition of the company.

Running head: FINANCE
Finance
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Task 4: Preparation of Cash Flow Statement.............................................................................2
Task 5: Change Analysis and Decision Making........................................................................3
Task 6: GST and Cash Flow Statement.....................................................................................4
Task 7: Cash Flow Outcome Analysis.......................................................................................4
Task 8: Petty Cash Book............................................................................................................6
References..................................................................................................................................7

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Task 4: Preparation of Cash Flow Statement
Cash Flow statement for Metropolitan Inc. for the year ended 31st of December
2012
Operating activities: $ Net Cash flow
Cash Receipt from Customers 245000
Cash paid to suppliers and employees
-
101570
Cash generated from operation 143430
Dividend Received 25,654
Interest Received 22,550
Interest paid
-
24,120
Income tax paid
-
25,910
Net Cash Flow from Operating Activities 1,41,604
Investment activities:
Purchase of Subsidiary X, net of cash acquired
-
450000
Purchase of property, plant and equipment
-
350100
Total Cash Outflow from Investing Activities -800100
Proceeds from sale of equipment 120000
Total Cash Inflow from Investing Activities 120000
Net Cash Flow from Investing Activities -680100
Financing Activities:
Proceeds from issue of share capital 250000
Proceeds from long-term borrowings 250000
Total Inflow from Financing Activities 500000
Payment of finance lease liabilities -50000
Dividends paid -25700
Total Outflow from Financing Activities -75700
Net Cash Flow from Financing Activities 424300
Total Cash surplus/deficit -1,14,196
Cash and cash equivalent at the beginning of the year 530750
Cash and cash equivalent at the end of the year 4,16,554

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Task 5: Change Analysis and Decision Making
The cash flow statement reflects a positive cash balance of about $416,554 which was
derived after taking the key cash inflows and outflows of the company. The three important
sections of the sums is the inclusion of the operating, investing and financial activity of the
company that is applied. The cash flow from operations for the company was positive where
all the key accounts and expenses of the company were taken into account for the purpose of
analysis. The cash flow from operations for the company has been positive for the company
which is most needed. On the other hand it is to be noted that the company did a massive
capital expenditure in the following year by purchasing several of the property, plant and
other non-current assets if the company (Wu et al. 2016). The financing activities of the
company on the other hand saw an increase financing activity by financing the operations of
the company by equity and debt sources of the company. While analysing the operating
activities of the company it was noted that the company has a major portion of the debt for
which interest paid played a significant portion in the operating expenses of the company. It
is important for the company to maintain an optimal capital structure thereby analysing the
various options and scenarios that may influence the financial condition of the company. The
company had a positive balance at the end of the year after adding up the opening cash
balance of the company but at the same time it is advisable that the operating activities of the
company should be sufficient and play a significant role thereby meeting the investing needs
of the company. The changing business and conditions and the financial performance of the
company needs to be reviewed carefully thereby assessing the financial position of the
company.

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Task 6: GST and Cash Flow Statement
Budgeted cash flow statement
Cash Receipts: $ $
Cash sales 90,000
GST receipts on cash
sales
9,000
Credit sales - budget year 1,50,000
Credit sales - previous
year
11,000
Total Cash receipts 2,60,000
Cash Payments:
Purchases 80,000
GST payments on cash
purchases
8,000
Wages 1,10,000
Net GST payable to ATO -10,000
Other payments 44,000
Total Cash Payments: 2,32,000
Cash surplus/(deficit) 28,000
Opening bank balance 30,200
Closing bank balance 58,200
Task 7: Cash Flow Outcome Analysis
The budgeted cash flow was done after taking several accounts and transaction for the
company in the form of forecasting the same for the purpose of analysis. The cash flow
statement for the company was realized by taking the opening bank balance of about $30,200
which was taken into account for the purpose of analysis. In order to determine the cash flow
outcome for the company it is important to determine all the sources of cash inflows and al
the sources of cash outflows for the company (Chen and Teng 2015). The total cash receipts
for the company would be in the form of cash and credit sales of the company. The total cash
payments of the company was calculated after taking all the major cash expenses that would
be done by the company. The cash payment for the company would be in the form of

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payment of purchases done by the company, GST Payment on cash purchases, Wages, Net
GST and other payments.
The total cash receipts for the company was around $260,000 and the total cash
payments for the company was around $232,000 this shows that the company is expected to
have a positive balance at the end of the year. The company is expected to have a cash
surplus of around $28,000 and the total closing cash balance of the company would be around
$58,200. The company’s operation is well maintained where the cash receipts of the company
plays a dominating part in paying off the cash payments of the company (Williams and
Dobelman 2017).

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Task 8: Petty Cash Book
Petty Cash Book
Date Received Details
Referenc
e Paid Stationery Staff Ammen. Cleaning Travel Off. Support GST
02-
Jan 400 Cash Received
03-
Jan Office Supplies 001 22 22
04-
Jan Milk 002 105 105
09-
Jan
Cleaning
Supplies 003 135.3 135.3
10-
Jan Taxi Fare 004 52.8 52.8
315.1 22 0 135.3 52.8 105
11-
Jan
400 315.1
11-
Jan 84.9 Cash Balance b/d 84.9
Reimbursement
13-
Jan Taxi Fare 005 66 66
16-
Jan Stationery 006 33 33
17-
Jan Milk 007 82 82
19-
Jan Calculator 008 61.6 61.6
23-
Jan Taxi Fare 009 44 44
30-
Jan Newspaper 010 105.6 105.6
392.2
30-
Jan
84.9
Cash Balance b/d 307.3
Reimbursement 234

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References
Chen, S.C. and Teng, J.T., 2015. Inventory and credit decisions for time-varying deteriorating
items with up-stream and down-stream trade credit financing by discounted cash flow
analysis. European Journal of Operational Research, 243(2), pp.566-575.
Williams, E.E. and Dobelman, J.A., 2017. Financial statement analysis. World Scientific
Book Chapters, pp.109-169.
Wu, J., Al-Khateeb, F.B., Teng, J.T. and Cárdenas-Barrón, L.E., 2016. Inventory models for
deteriorating items with maximum lifetime under downstream partial trade credits to credit-
risk customers by discounted cash-flow analysis. International Journal of Production
Economics, 171, pp.105-115.