1. Which of the following will be treated as Cash and cash equivalents? a.

Balance in the Current Account with State Bank of India b. Investment in the shares of a subsidiary company c. Investment in 10 year government bonds maturing after 2 months d. Investment in Equity Mutual Funds e. Fixed Deposit with Canara Bank maturing after 1 year Out of the above only a) and c) will be classified as Cash & cash equivalents as they are readily convertible into cash without any significant risk of change in value. Investment in shares of a subsidiary company (b) and Fixed Deposit (e) above are long term investments and hence are not treated as cash equivalents. Whereas investment in equity mutual fund (d) above though can readily be converted into cash, but it carries significant risk of change in value and hence is not treated as cash equivalent. 2. From the given Profit and Loss Account and additional information from the Balance Sheet ascertain the Cash Flow from Operating Activities for Samurai Toys Limited for the year 2010-11. Profit & Loss Account for the year ended 31st March 2011 Income Sale Revenue Interest earned Total Income Less: Expenses Material Consumed Employees Cost Administrative and Marketing Expenses Depreciation & Amortization Interest and Finance Charges Profit Before Tax Provision for Tax Profit After Tax 67.47 23.34 37.89 18.56 13.45 30.47 10.00 20.47 Crores 168.75 22.43 191.18

Additional Information The company paid `8 Crores towards taxes during the year. The following details were extracted from the Balance Sheet of the Company 31st March 2010 Inventories Sundry Debtors Sundry Creditors Other Current Liabilities 43.24 39.77 26.89 7.75 31st March 2011 55.15 30.43 20.45 11.34

Cash Flow from Operating Activities of Samurai Limited for the year 2010-11 Particulars Profit Before Tax Add: - Depreciation and Amortization - Interest & Finance Charges Less: - Interest earned Profits Before Working Capital Changes Add: - Decrease in Sundry Debtors - Increase in Other Current Liabilities Less: - Increase in Inventories - Decrease in Sundry Creditors Profit after Working Capital Changes Less: - Taxes paid Cash Flow from Operating Activities Amount (`Crores) 30.47 18.56 13.45 (22.43)

9.34 3.59

(11.91) (6.44) 34.63 (8.00) 26.63

3. As on 31st March 2011, the cash and cash equivalents of Muscles Power Limited stood at `945 million as compared to `1014 million in the previous years Balance Sheet. During the year the company generated a net cash flow of `844 million from its operating activities and used a net amount of `1235 million towards investing activities. What are the net cash flows from financing activities? Change in Cash & Cash Equivalents Balance at the end of the year Less: Balance in the beginning of the year Net decrease in cash and cash equivalents ` Million 945 1014 ( 69)

The sum of cash flow under three heading should be equal to -`69 million. Cash Flow from (Operating Activities + Investing Activities + Financing Activities) = Net Change in Cash and Cash Equivalents `844 - `1235 + Financing Activities = -`69 million -`391 + Financing Activities = -`69 million; solving the equation Cash Flow from Financing Activities = `322 million. The company raised a net cash flow of 322 million from financing activities during the year. 4. On the basis of information given fill the missing entries: Particulars Start up Ltd. Mature Ltd Expand Ltd Cash Rich Ltd.

`Crores

Increase or decrease in Cash Cash & Cash Equivalent at the end of the year at the beginning of the year Increase or (decrease) in cash Cash Flow during the year i. Operating Activities ii. Investing Activities iii. Financing Activities Net Cash Flow (i+ii+iii)

42.34 3.28 ? -5.78 -102.47 ? 39.06

235.27 ? 51.78 ? -276.38 -104.73 51.78

? 235.67 -100.69 334.89 ? 349.09 ?

? 256.17 ? 580.79 -221.12 ? 177.49

Solution: The completed table is shown below. Particulars Start up Ltd. Mature Ltd Expand Ltd Cash Rich Ltd.

`Crores Increase or decrease in Cash Cash & Cash Equivalent at the end of the year at the beginning of the year Increase or (decrease) in cash Cash Flow during the year i. Operating Activities ii. Investing Activities iii. Financing Activities Net Cash Flow (i+ii+iii)

42.34 3.28 39.06

235.27 183.49 51.78

134.98 235.67 -100.69

433.66 256.17 177.49

-5.78 -102.47 147.31 39.06

432.89 -276.38 -104.73 51.78

334.89 -784.67 349.09 -100.69

580.79 -221.12 -182.18 177.49

Preparation and Interpretation of Cash Flow Statement Container Corporation of India Limited

From the abridged Profit & Loss Account as on 31st March 2010, excerpts from the Balance Sheets as on 31st March 2009 and 2010 and additional information, prepare the Cash Flow Statement of the company for the year ended 31st March 2010.
Profit & Loss Account for the year ended 31st March 2010 Income from Operations 3705.68 Interest and Dividend Income 148.41 Other Operating Income 31.64 Total Income Misc Expenses Depreciation and Amortization Provision for doubtful debts Prior Period Adjustment Total Expenses Profit Before Tax Provision for Tax Tax Adjustment for earlier year Profit After Tax 3885.73 2744.02 135.1 0.02 -0.49 2878.65 1007.08 219.92 -0.47 786.69 Excerpts from the Balance Sheet as on 31st March 2010 2009 6.99 5.08 207.8 212.3 483.57 482.39 23.71 17.86

Inventories Debtors & Other Recoverable Current Liabilities Provision for Employee Benefits

Additional Information i) ii) iii) iv) v) The company paid `368.49 Crores toward direct taxes during the year. The company acquired fixed assets (capital work in progress and advances) costing `303.30 and made investments aggregating to `37.46 Crores. An advance of `6 Crores was made to a subsidiary company. Some old assets were sold during the year for a consideration of `0.14 Crore. Dividend paid during the year amounted to `181.98. In addition corporate dividend tax of `30.94 Crores was also paid during the year.

Solution
Net Profit Before Tax Adjustment for :Depreciation/Amortization Interest & Dividend Income Provision for doubtful debts/advances Decrease in Trade & Other Receivables Increase in Inventories Increase in Trade Payable & Provision Direct Taxes paid Cash Flow from Operating Activities Investing Activities Purchase of Fixed Assets Sale of Fixed Assets Purchase of Investment Interest, Dividend & Other Income Advances/loans - Joint Ventures & Subsidiary Cash flow from Investing Activities Financing Activities Dividend paid (including tax on dividend) Cash flow from Financing Activities Opening Balance of Cash & Cash Equivalents Closing Balance of Cash & Cash Equivalents Increase in Cash & Cash Equivalents 1007.08 135.1 -148.41 0.02 4.5 -1.91 7.03 1003.41 -368.49 634.92

-303.3 0.14 -37.46 148.41 -6.00 -198.21

-212.92 -212.92 1765.72 1989.51 223.79