Study the statement of cash flows of Mantis Limited for the year ended 31 December 2021 and answer the following questions: Comment on the following: 1.3.1 Cash flows from operating activities (R181 800) 1.3.2. Increase in inventory (R808 000)
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
REQUIRED
Study the statement of
- Comment on the following:
- 1.3.1
- Cash flows from operating activities (R181 800)
1.3.2. Increase in inventory (R808 000)
1.3.3 Increase in receivables (R606 000)
1.3.4 Interest paid (R80 800)
1.3.5 Cash flows from investing activities (R2 343 200)
INFORMATION
|
MANTIS LIMITED |
|
|
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2021 |
|
|
|
R |
|
Cash flows from operating activities |
(181 800) |
|
Operating profit |
979 700 |
|
|
? |
|
Profit before |
? |
|
Working capital changes |
(808 000) |
|
Increase in inventory |
(808 000) |
|
Increase in receivables |
(606 000) |
|
Increase in payables |
606 000 |
|
Cash generated from operations |
494 900 |
|
Interest paid |
(80 800) |
|
Dividends paid |
? |
|
Income tax paid |
(272 700) |
|
|
|
|
Cash flows from investing activities |
(2 343 200) |
|
Purchase of plant and equipment |
(2 343 200) |
|
|
|
|
Cash flows from financing activities |
0 |
|
- |
0 |
|
Net decrease in cash |
(2 525 000) |
|
Cash balance (31 December 2020) |
3 232 000 |
|
Cash balance (31 December 2021) |
707 000 |
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