Cashflow Project+Sandhya

8/6/2019 Cashflow Project+Sandhya

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PREFACE

Cash flow analysis is the study of the cycle of your business' cash inflows and outflows,

with the purpose of maintaining an adequate cash flow for your business, and to provide

the basis for cash flow management. Cash flow analysis involves examining the

components of your business that affect cash flow, such as accounts receivable,

inventory, accounts payable, and credit terms. By performing a cash flow analysis on

these separate components, you'll be able to more easily identify cash flow problems and

find ways to improve your cash flow. Cash-flow in financial analysis means net income

or profit obtained after adding back expense items which currently do not use cash such

as depreciation. It may also exclude revenue items, which do not currently provide funds.

It comes in two varieties gross and net. Depreciation is not a tangible expense which is

paid for by drawing a cheque but is a sum set aside each year, whether there is profit or

not, for the replacement of an asset when it is worn-out. Such sums of money can be used

to buy new plant or they can be kept in a bank, invested in gilt-edged securities or used in

any way that the directors may choose. They, in fact form part of the cash-flow which

is the amount retained in the business after paying off all expenses including taxes and

dividends. Gross cash-flow is the net profit after tax plus the provision for depreciation.Net cash-flow is obtained from the gross figure by deducting the amount distributed as

dividend on preference and ordinary shares. Of the two, net cash-flow is the more

important and commonly used because it represents the actual amount of cash retained in

the business after all outgoings including dividends. It is frequently assumed that there

will always be a cash-flow at least equal to the provision for depreciation or other

adjustments not involving cash. This will be true only if the total revenue (sales and other

income) for a period fully covers all of the expenses including depreciation and other

write-offs. If the operations for a period result in a loss and if the loss exceeds the non-

cash adjustments, the cash-flow will be negative instead of being positive.

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CHAPTER-1

INTRODUCTION

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INTRODUCTION

CASH FLOW STATMENT

Cash Flow Statement Overview

The cash flow statement shows a company's money flow in and out over a fixed period

of time. Most companies report their cash flow statement on a quarterly or monthly

basis. The cash flow is broken out into three reporting areas: (1) Operating, (2) Investing,

and (3) Finance. The cash flow statement was originally known as the flow funds

statement or statement of changes in financial position.

The statement of cash flow reports the movement of cash into and out of your business in

a given year. Cash is the lifeblood of your company. Cash includes currency, checks on

hand, and deposits in banks. Cash equivalents are short-term, temporary investments such

as treasury bills, certificates of deposit, or commercial paper that can be quickly and

easily converted to cash.

Your business will use cash to pay bills, repay loans, and make investments, allowing

you to provide goods and services to your customers. Your company will use cash to

generate even more cash as a result of higher profits. The cash flow statement reports

your business sources and uses of cash and the beginning and ending values for cash and

cash equivalents each year. It also includes the combined total change in cash and cash

equivalents from all sources and uses of cash.

It is imperative that you, the business owner, be able to successfully prepare a statement

of cash flow. This discussion provides a detailed look into the various sections of a cash

flow statement. It also describes two methods used to calculate cash flow from operating

activities, indirect and direct with examples that will give you an edge when it comes

time to prepare a cash flow statement of your own.

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Purpose of the Cash Flow Statement

The cash flow statement is intended to provide information on a firm's liquidity or

solvency. The cash flow provides a clear understanding of a company's financial

resources at a given point in time.

The cash flow statement shows cash coming into a company (from sales, income from

investments, asset sales) and going out (payments to suppliers, investment), the raising of

capital (money borrowed or raised from shareholders) and the payment of returns of

capital (interest and dividends) and tax.

Like profit, cash flow can be measured at a number of levels. For example, operating

cash flow roughly corresponds to operating profit with the effects on non-cash items

stripped out.

The main items in a typical cash flow statement are (in order):

cash flow from operating activities

returns on investments and servicing of finance

taxation

capital expenditure and financial investments

acquisitionsand disposals

equity dividends paid

management of liquid resources

financing

The returns on investments and servicing of finance includes dividends received (e.g.from subsidiaries) and interest from fixed interest securities and bank deposits. It will

also show payments to lenders: both banks and holders of a company's fixed interest

securities.

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Capital investments and financial investments will show the cashflow relating to the

purchase and disposal of fixed assets. Liquid resources are cash and liquid, short term,

investments.

All items in the cash flow statement can be significantly different from equivalent items

on the P & L. This is what makes the cash flow so valuable (it is not susceptible to

manipulation), but it can also make it less meaningful (there are good reasons for

accruing in the other accounting statements).

Operating cash flow is very often looked at by investors. The capital expenditure item is a

quicker way of finding out how heavily the company is investing than looking at the

balance sheet (and then correcting for depreciation etc.) but it has two weaknesses: it

does not record purchases not yet paid for and it does not allow one to separate capital

expenditure on operating assets from long term financial investments.

A more complex use of the cashflow statement is the calculation of free cash flow, which

can be used in valuation ratios and DCF valuations. All the items in the cashflow

statement provide a useful check on items in the other accounting statements and are a

vital input to the financial models used for forecasting.

The bulk of the positive cash flow stems from cash earned from operations, which is a

good sign for investors. It means that core operations are generating business and that

there is enough money to buy new inventory. The purchasing of new equipment shows

that the company has cash to invest in inventory for growth. Finally, the amount of cash

available to the company should ease investors' minds regarding the notes payable, as

cash is plentiful to cover that future loan expense.

Of course, not all cash flow statements look this healthy, or exhibit a positive cash flow.

But a negative cash flow should not automatically raise a red flag without some further

analysis. Sometimes, a negative cash flow is a result of a company's decision to expand

its business at a certain point in time, which would be a good thing for the future. This is

why analyzing changes in cash flow from one period to the next gives the investor a

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better idea of how the company is performing, and whether or not a company may be on

the brink of bankruptcy or success.

Tying the CFS with the Balance Sheet and Income Statement

As we have already discussed, the cash flow statement is derived from the income

statement and the balance sheet. Net earnings from the income statement is the figure

from which the information on the CFS is deduced. As for the balance sheet, the net cash

flow in the CFS from one year to the next should equal the increase or decrease of cash

between the two consecutive balance sheets that apply to period that cash flow covers.

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SCOPE OF THE STUDY

This study is going to help, in identifying the causes of satisfaction or

dissatisfaction regarding company financial activities. This study also describes

certain factors that explain measures that how we can make financial system more

effective. It is helpful in doing short term planning as it provides information

regarding the sources and utilization of cash during a period, so it became easier

for management to assess whether it will have adequate cash to meet day to day

expenses and pay creditors in time. It is also useful in preparing cash budget for

the future period as it informs the management about surplus or deficit periods of

cash. So it is helpful in planning the investment of surplus cash in short term

investments and to plan short term credit in advance for deficit periods. This study

is also helpful in knowing trends and speed at which the current assets and current

liabilities are being paid. It also reveals how the company take help of cash flow

statement to ascertain the position of cash generated from operating activities

which can be used for payment of dividend.

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OBJECTIVE OF THE STUDY

To analyze the cash flow statement in Indoasian Fusegear Ltd to study the

deviation of cash from earning.

SUB OBJECTIVES OF THE STUDY

Cash flow statement analysis is useful for company short term financial

planning

Useful in preparing the cash budget

Another objective of analysis of cash flow statement is comparison with the

cash budget

To study the trend of cash receipts and payments

To explains the deviations of cash from earnings

To know the cash flow from various activities separately

To raise the funds in a manner that the cost of capital is minimum

To ensure flexibility in capital structure so that changes in the sources of

funds may be made according to the changing situation

To ensure sufficient liquidity of funds

Suggesting the new ways and new techniques which can be introduced to the

existing financial system, to improve its effectiveness and usefulness.

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RESEARCH

METHODOLOGY

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RESEARCH METHODOLOGY

Research simply means search for knowledge. According to Rodman and Mory,

research is systemized effort to gain new knowledge. Some people consider

research as a movement from known to unknown; it is actually a voyage of

discovery. According to Clifford Woody, research includes defining and

redefining problem, formulating hypothesis or the suggested solutions, collecting

organizing and evaluating data, reaching conclusions and at last carefully testing

the conclusions to determine whether they fit to the formulated hypothesis or not.

Research methodology has many dimensions, it includes not only the research

methods but

also consists the logic behind the methods used in the context of the study and

explains why

only a particular method of technique had been used so that search lend

themselves to

proper evaluation. Thus in a way it is a written game plan for concluding

research.The

term research refers to search of something new that can solve a problem.

Research must

have a specific objective which is called research problem. On the basis of the

problem,

researcher sets hypothesis. The goal of the research process is to produce new

knowledge, which takes three main forms:

Exploratory research:- which structures and identifies new problems

Constructive research:- which develops solutions to a problem

Empirical research:- which tests the feasibility of a solution using empirical

evidence

Casual research:- which is related to day to day problems or for casual proble

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RESEARCH DESIGN

The research design used here is Exploratory Research Design .I have to study

the

Cash flow statement .So I need to enquire about financial activities and cash

involved in them. So availability of cash flows is collected by people related with

company financial sector and based on the reports I have to explore the factors

that really help me in analysis of cash flow statement.. Since the major emphasis

was

on the discovery of ideas and insights into the facts, the research design most

appropriate

must be flexible enough to permit the consideration of many different aspects

of a

phenomenon.

The methods used in context of this research design are:(1) The survey of concerning literature,

(2) Experience Survey.

The important features of this research design are listed as follows:

The sampling design used is Non-Probability Sampling design and it is flexible in

nature.

There is a no pre-planned design for the analysis.

There is structured instrument for the collection of the data i.e. company cash

flow statement

No fixed decisions about the operational procedures.

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SAMPLING DESIGN

1. Sampling Unit

It defines the unit of target population that will be sampled i.e. it answers who is

to be surveyed. Sampling unit in my study will be individual employees of

Vijaya Dairy who are indulging in making financial activities.

2. Sampling Techniques

This refers to the procedure by which the respondents should be chosen. In this

study, Non Probability sampling of the following type is used:-

Convenience sampling

Sample Size

It indicates the number of people to be surveyed. Through large sample give more

reliable results than small samples but due to constraints of time and money the sample

size was restricted to few respondents.

Area of Study

Though other methods are important, but this method is given prime significance in

modern research because of its extensive use to study the relationship of different

factors, attitudes and practices of society and to explore the problems that cannot be

treated by experiment methods.

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SOURCES OF DATA COLLECTION:

The data can be collected from secondary sources. The basic premises of my study

are supplemented with the secondary data.

1. Primary Data

Personal Investigation

Observation Method

Information from correspondents

Information from superiors of the organization

2. Secondary Data

Unpublished Sources such as Company Internal reports prepare by themgiven to their analyst & trainees for investigation.

Websites like Vijaya Dairy official site, some other sites are also searched

to find data.

ANALYSIS AND REPORTING THE FINDINGS

Compilation of data through statement

Presentation of findings

Suggestions and conclusions

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CHAPTER-3

INDUSTRY PROFILE

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DAIRY INDUSTRY IN INDIA

The dairy industry in India is going through major changes with the liberalization

policies of the government and restructuring of the economy. These have brought greater

participation of the private sector. This is also consistent with global trend which could

hopefully lead greater integration at Indian dairying with the world market for milk and

milk product.

After stagnating to 80 million tones for 20 years between 1950 and 1970 Indian

milk production began to rise. Crossing 30 million tons in 1980 and 59 million tones in

1992.Today India ranks as the world second largest milk producer after the U.S.

DAIRY INDUSTRY IN ANDHRA PRADESH

The main occupation of Andhra Pradesh is Cultivation. The village reflects

the Social, Economic, Moral and Culture of Human Race. Dairy Stands as the Back-

bone of Agriculture at the same time it place important activity for stability of Rural

Economic Conditions and helps to maintain Nations health by supplying sweet milk.

It provides not only income but also income to the Milk producers. Now the

productions of milk become a subsidiary occupation among marginal farmers, small

farmers and Agricultural labor.

The programme of Dairy Industry was matted with commendable help of the

United Nations International childrens Emergency fund, Food and Agricultural

Organizations and freedom from Hunge co-campaign organizations of U.K. these

Organizations lit of this establishment of dairy units at Hyderabad and Vijayawada

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in 1969 respectively which lead to pioneer Dairy development program in Andhra

Pradesh. Later to set cooling and chilling centers have been set up to feed these two

gigantic units.

The Government of Andhra Pradesh has started Dairy Development

Corporation to safe guard the interests of milk producers And ensuring supply of

fresh milk at reasonable price to urban consumers as an our come A.P.D.D.C

provided employment to nearly 20 employees and organize as many as 87 dairy

units including 7 milk factories, 13 district dairies, 22 chilling centers, 24 mini

chilling centered, 18 cooling centers, and 15 mini cooling centers. In addition to that

the private units are contributing Their little mite in their development of the dairy

industry. M/S Hindustan Milk Foods that have started a malted milk productsFactory at Rajamundry. Further to enhance working efficiency and to increase

turnover, the Government an autonomous dairy Collection development corporation.

As a result of these measures the dairy industry improving towards massive milk

collection.

The will go along way in improving the supplement income to them. Further

lucrative market for all the milk at the door steps of milk producers in a village at

fair rate based on the two access policy is assured it could handle all the milk with its

network of chilling and cooling centers. More than 3.5 Laksh milk producers get 20

crores per anum for supplying of the milk, which 69% of total beneficiaries belong

to small and marginal farmers, Agricultural laborers and other weaker sections of the

society. All the efforts by A.P.D.D.C. and N.D.D.B. today Andhra has excellent

potential for milk production with progressive farmers. Who are more receipts to the

new technology and scientific practices, the estimate milk production is 40 Lakhs

per day.

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DAIRY SCENARIO:

Milk is an important nutritious food. It is more important to infants and old people. Large

number of people depends upon milk as an important source of nourishment. India with

its vast population gives sentimental attachment to milk as a good food. Milk is substance

with 1.029 to 1.035 specific

Gravity and contains fat minerals proteins and vitamins. The government of

India encouraged co-operative societies for production of milk and its products and

setting up process of large milk units.

India is today second largest producer of the milk in the world. Second only is the

U.S.A contributing 11% of the world market. The production of milk in India is 577

Lakes of tones per year. It may be seen that the milk procurement by the organized sector

is presently a fraction of the total milk available. There is sufficient scope for

procurement of milk and for the growth of the milk sector. With high quality technology

and expertise available indigenously and with the milk and milk product s order

announce by the government enabling the private sector to deal directly with farmer.

Organized handling of milk would lead to proper procurement measures.

Which would in turn be beneficial to farmers? Remunerative price to farmers would lead

to better care of cattle and there by set in motion a healthy cycle of increased availability

of good milk.

WORLD FOCUS ON INDIAN DAIRY

Indian dairying is emerging as a Sunrise Industry India represents one of the

worlds largest and fastest growing markets for milk the 250 million strong classes.

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Two main reasons for the world focus on India are one, the low cost economy:

and two the liberalization process initiated since 1991. Other important factors include:

Iowa inflation rate, inexpensive labor the presence of the worlds third largest pool of

technical man power, the worlds largest democracy.

Efforts to increase milk product by dairy farmers are strongly influenced by the

degree to which demand signals are transmitted through the marketing system. Co-

operative has played an important role in transmitting the message of urban market

demand to them.

COMPETITIVE ADVANTAGES OF INDIAN DAIRY

In the emerging liberalized global scenario, trade distorting agriculture policies

has been the focus of the GATT multilateral trade negotiation. With the liberalization of

agricultural trade under the new GATT regime, the heavy subsides prevalent in the dairy

sector in the countries of the European Union as well as in the US will have to be brought

down in the next few years .The competitive advantage of the Indians dairy industry are

then considered to be substantial. With the substantial and continued investment in

building up milk production. Indian can emerge as a major exporter of dairy products, at

least by the early part of the next century , even through an prospects, at least by the

early part of the next century, even though an prospects may meet with considerable

opposition form the advanced dairy nation and this opposition is likely to focus

significantly on quality issues.

It is therefore necessary to evolve a long term dairy industry policy that will not

sustain but also enhance production and productive levels. This would require ensuring

remunerative and increased returns. To the farmer while ensuring supply of increased

fluid milk needs of the urban population at reasonable prices.

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COMPANY PROFILE

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COMPANY PROFILES

As the years passed, APDDCF built up the infrastructure needed to meet every

requirement of dairying, the procurement of milk from over 8,00,000 dairy farmers

spread across Andhra Pradesh. Or getting it ready for nationwide distribution. It all

happened with in the vast Dairy plant network of APDDCF through extensive use of high

technology and management acumen honed to steer such a widespread operation and

brought prosperity to the state many times.

The federation has drawn up more comprehensive system for procurement and

processing of milk.

A dedicated research cell is actively pursuing way and means of bettering quality.

Collaboration with global experts is also being sought, all in the attempt to remain at the

forefront of modern dairying in India where QUALITY will be the watch world.

REACHING OUT OF THE WORLD

APDDCF began its exports efforts thirteen years ago and has gained significant ground

abroad. It has spread its marketing network in the Gulf and is exploring the possibility of

exporting diary products like Butter, Ghee, Spread, UHT Milk; Sterilized cream etc., to

other countries the federation has been meeting the tastes of divergent cultures, while

bringing back the pleasure of home to Non-resident India.

Today, APDDCF is in process of acquiring capabilities to join the big league in diary

technology from U.S.A, U.K, Australia, New Zealand and the Netherlands.

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VIJAYA DIARY AT A GLANCE

Name of the Organization : Vijaya Diary Limited

Nature of the business : Liquid Milk, Ghee, Butter milk

Basic raw material : Milk

Procuring the raw material : Co-operative Milk Society Boots.

Year of establishment : 1969

Plant Location : Venkateswara puram, Nellore.

Plant Capacity(per day) : 75000 Liters

Promoters : AP Milk Co-Operative Society, Hyd.

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DIARY DEVELOPMENT ACTIVITIES IN NELLORE DISTRICT

During the year 1969, the Nellore dairy was started with initial capacity

Of 12,000 liters per day mostly to collect milk from surrounding villages. After wares

due to increase in procurement the handling capacity was expanded to 40,000 liters per

day during the year 1979. The Milk Chilling Centers at Kavali was started during the

year 1977 with an initial capacity of 6,000 liters per day. Similarly the Milk Chilling

center at Venakatgiri was started during the year 1981 with the same capacity.

During the year 1985, due to increase in Milk procurement in the district the

handling of Milk chilling center Kavali and Venkatagiri has been increased from 6,000

liters to 12,000 liters per day. In the year 1986, the Nellore Milk Union was registered

under AP Co. OP Societies Act 1964.

Due to further increase in the Milk procurement the present handling capacity of

Nellore Diary is expanded to 40,000 its to 75,000 its per day and Milk Chilling Center

Kavali also expanded from 12,000 its to 20,000 its per day under O.F.III Programmed in

1993. Another Milk Chilling Center in the district at Dutttalur with handling capacity of

10,000 its per day was started in month of October 1995 and subsequently expanded

20,000 its per day during the year 1998.

At present there are nearly 57,360 milk producers supplying milk to Nellore Union

out of which there are small farmers 23,960 marginal farmers 8,300. Among these milk

producers there are Schedule Caste 8,152, Schedule Tribes 697, Backward Class 11,612

and the remaining Other Castes are supplying milk to these Unions and they are being

benefited financially by sales of milk by and amount of Rs.210 Lakhs is being paid the

Milk Producers per month.

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The data related to the above development of Nellore Diary has been shown following

table.

TABLE 1.1

PERFORMANCE OF DAIRY IN NELLORE (DIST)

NAME OF THE

UNIT

CAPACITY PER

DAY

PRESENT PER

DAY

PEAK ON ANY

DAY OF THE

YEAR

Nellore Dairy 75,000 Liters 36,000 Liters 43,000 Liters

Kavali Dairy 30,000 Liters 12,000 Liters 17,000 Liters

Venkatagiri Dairy 12,000 Liters 12,000 Liters 12,000 Liters

Duttalur Dairy 22,000 Liters 22,000 Liters 22,000 Liters

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BRIEF NOTE OF MARKETING DIVISION

The Andhra Pradesh Dairy Development Federation has got 6 product

manufacturing units in Andhra Pradesh namely

a. Milk Products Factory, Hyderabad.

b. Milk Products Factory, Chittore.

c. Milk Products Factory, Nandyal.

d. Milk Products Factory, Proddutoor.

e. Sangam Dairy Products Factory, Vadlamudi.

f. Milk Products, Vijayawada.

g. The products manufactured by these units are being sold under brand

name of VIJAYA. The products generally produced for the National

Market are:

1. Skim Milk Powder.

2. White Milk Powder.

3. Vijaya Spray.

4. Table Butter.

5. Cheese.

6. Ghee and White Butter.

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SPEACILITIES OF VIJAYA DAIRY

1. Only milk producing company which exports its products to Malaysia.

2. Only Dairy offering five varieties of milk for the benefit of the

consumers.

3. A Wide range of milk produced under VIJAYA DAIRY

4. Range of UHT processed milk and milk products with shelf life of 4

months.

5. A large Distribution Network.

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BY-PRODUCTS:

In addition to milk the following by-products are also being Manufactured and

marketed by the dairy.

Butter milk

Basundhi

Curd

Sweet Lassie

Flavored Milk

Paneer

Cooking butter

Doodh Peda

Milk Cake

Ghee

Skim milk powder

Strict quality controls are adopted before releasing the product to the market.

The brand name is well established and is known for its quality.

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FINANCIAL SUPPORT:

The dairy is established with the financial assistance from Andhra Pradesh

State Financial Corporation and the equity capital raised from the shareholders.

EXPANSION PROPOSALS:

1. New Milk Cooling Centers are Doravarisatram and Nellorepalem:

The MCC Venkatagiri has been located at South West Corner, with respect to

Milk procurement areas. As a result almost all the routs vehicles were to run

idle from Gudur to Venkatagiri about 40 Kms. As a result the quality of Milk

is getting deteriorated apart from the abnormal transport cost, moreover

certain Mandals like Naidpet, Sullurpet, Tada and Pellakur are not covered,

where there is good Milk Potentiality.

In view of the above, one Bulk Cooling center of 5000 Lts. Per day

capacity is established at D.V.Satram and is functioning from 21.4.2000.

Similarly one more Bulk cooling center was established at Nellorepalem

and it is functioning from 14.6.03.

2. Bulk cooling center at Adurpalli, Seethaamapuram and Rapur:

Similarly three more Bulk Cooling Centers of 5000 Lts per day capacity are

proposed one each at Adurupalli, Seethamapuram and Rapur with an

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estimated cost of Rs.23.00 Lakhs each to cover more number of remote

villages.

CHAPTER-4

CONCEPT OF CASH

FLOW ANALYSIS

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CONCEPT OF CASH FLOW ANALYSIS

INTRODUCTION TO CASH FLOW STATEMENTS

Cash flow is essentially the movement of money into and out of your

business; it's the cycle of cash inflows and cash outflows that determine your business'

solvency.

Cash flow analysis is the study of the cycle of your business' cash

inflows and outflows, with the purpose of maintaining an adequate cash flow for your

business, and to provide the basis for cash flow management.

Cash flow analysis involves examining the components of your business

that affect cash flow, such as accounts receivable, inventory, accounts payable, and credit

terms. By performing a cash flow analysis on these separate components, you'll be able to

more easily identify cash flow problems and find ways to improve your cash flow.

Cash-flow in financial analysis means net income or profit obtained after

adding back expense items which currently do not use cash such as depreciation. It may

also exclude revenue items, which do not currently provide funds. It comes in two

varieties gross and net.

Depreciation is not a tangible expense which is paid for by drawing a

cheque but is a sum set aside each year, whether there is profit or not, for the replacement

of an asset when it is worn-out. Such sums of money can be used to buy new plant or

they can be kept in a bank, invested in gilt-edged securities or used in any way that the

directors may choose. They, in fact form part of the cash-flow which is the amount

retained in the business after paying off all expenses including taxes and dividends.

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Gross cash-flow is the net profit after tax plus the provision for

depreciation. Net cash-flow is obtained from the gross figure by deducting the amount

distributed as dividend on preference and ordinary shares. Of the two, net cash-flow is the

more important and commonly used because it represents the actual amount of cash

retained in the business after all outgoings including dividends.

It is frequently assumed that there will always be a cash-flow at least

equal to the provision for depreciation or other adjustments not involving cash. This will

be true only if the total revenue (sales and other income) for a period fully covers all of

the expenses including depreciation and other write-offs. If the operations for a period

result in a loss and if the loss exceeds the non-cash adjustments, the cash-flow will be

negative instead of being positive.

CONCEPT OF CASH FLOW STATEMENT

Cash Flow Statement

Cash flow statement may provide considerable information about

what is really happening in a business beyond that contained in either the income

statement or the balance sheet. Analyzing this statement should not present an

intimidating task; instead it will quickly become obvious that the benefits of

understanding the sources and uses of a companys cash far outweigh the costs of

undertaking some very straightforward analyses.

Format of the Cash Flow Statement

The cash flow statement is divided into three sections:

o Cash flow from operating activities: shows the results of cash inflows and outflows

related to the fundamental operations of the basic line or lines of business in which the

company engages. (Example: cash receipts from the sale of goods or services and cash

outflows for purchasing inventory and paying rent and taxes.)

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o Cash flow from investing activities: associated with purchases and sales of non-current

assets (Example: building and equipment purchases or sales of investments or

subsidiaries.)

o Cash flow from financing activities: associated with financing the firm (Example:

selling and paying off bonds and issuing stock and paying dividends)

Exceptions

o Short-term marketable securities are treated as long-term investments and appear in

cash flow from investing activities

o Short-term debt is treated as long-term debt and appears in cash flow from financing

activities

o Although dividends are handled as a cash outflow in the cash flow from financing

activities section, interest payments are considered an operating outflow, despite the fact

that both are payments to outsiders for using their money.

BENEFITS OF THE CONCEPT

Critics point out that the term cash-flow, meaning net profit

inclusive of the provision for depreciation and similar non-cash transactions, is a

misnomer since it implies that because of the write-back of expense items like

depreciation which do not currently use cash, additional cash has flown into the business

when nothing of the sort has really happened. All that has been achieved by adding back

to the net profit the provision for depreciation and other non-cash transactions is to put on

a cash basis the annual accounts originally written on the accrual basis.

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The critics, nevertheless, admit that cash-flow is a valid analytical tool which, when

correctly used, helps explain:

1. How companies are able to finance large-scale expansion or modernization, or

repay heavy borrowings without resorting to fresh equity financing, and

2. Reconcile the difference in the net profit of companies operating within the same

industry and otherwise comparable on the basis of their capitalizations, product-mix, and

over-all management policies.

The revenue earned by a company from its operations appears on its profit and loss

account for the year as Sales and Other Income. After deducting from this the expenses

of the business including depreciation and income tax, there is left a balance commonly

termed the net profit (or loss) for the year.

But, unlike the out of pocket expenses like raw material costs, salaries, wages, etcetera,

depreciation and similar provisions do not represent current outlays of cash. To arrive at

the true spending power generated through operation it is necessary to add back to the net

profit the items which do not constitute either a source or a disposition of cash such as

depreciation which is one of the heaviest expense items listed on the profit and loss

account.

PREPARATION AND PRESENTATION OF CASH FLOW STATEMENT

The presentation of cash flow statement is carried out in two alternative formats that are

either through direct method or indirect method. The difference in these two methods lies

in their presentation of Cash flows from operating activities. In the direct method,

operating cash receipts and payments are reported directly. In the indirect method, cash

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date of acquisition. Investments in shares are excluded from cash equivalents unless they

are, in substance, cash equivalents; for example, preference shares of a company acquired

shortly before their specified redemption date.

Cash flows exclude movements between items that constitute cash or cash equivalents

because these components are part of the cash management of an enterprise rather than

part of its operating, investing and financing activities. Cash management includes in

investment of excess cash in cash equivalents.

Presentation of a Cash Flow Statement

The cash flow statement should report cash flows during the period classified by

operating, investing and financing activities.

An enterprise presents its cash flows from operating, investing and financing activities in

a manner which is most appropriate to its business.Classification by activity provides

information that allows users to assess the impact of those activities on the financial

position of the enterprise and the amount of its cash and cash equivalents. This

information may also be used to evaluate the relationships among those activities.

A single transaction may include cash flows that are classified differently. For example,

when the instalment paid in respect of a fixed asset acquired on deferred payment basis

includes both interest and loan, the interest element is classified under financing activities

and the loan element is classified under investing activities.

Operating Activities

The amount of cash flows arising from operating activities is a key indicator of the

extent to which the operations of the enterprise have generated sufficient cash flows to

maintain the operating capability of the enterprise, pay dividends, repay loans and make

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new investments without recourse to external sources of financing. Information about the

specific components of historical operating cash flows is useful, in conjunction with other

information, in forecasting future operating cash flows.

Cash flows from operating activities are primarily derived from the principal revenue-

producing activities of the enterprise. Therefore, they generally result from the

transactions and other events that enter into the determination of net profit or loss.

Examples of cash flows from operating activities are:

(a) Cash receipts from the sale of goods and the rendering of services;

(b) Cash receipts from royalties, fees, commissions and other revenue;

(c) Cash payments to suppliers for goods and services;

(d) Cash payments to and on behalf of employees;

(e) Cash receipts and cash payments of an insurance enterprise for premiums and claims,

annuities and other policy benefits;

(f) Cash payments or refunds of income taxes unless they can be specifically identified

with financing and investing activities; and

(g) Cash receipts and payments relating to futures contracts, forward contracts, option

contracts and swap contracts when the contracts are held for dealing or trading purposes.

Some transactions, such as the sale of an item of plant, may give rise to a gain or loss

which is included in the determination of net profit or loss. However, the cash flows

relating to such transactions are cash flows from investing activities

An enterprise may hold securities and loans for dealing or trading purposes, in which

case they are similar to inventory acquired specifically for resale. Therefore, cash flows

arising from the purchase and sale of dealing or trading securities are classified as

operating activities. Similarly, cash advances and loans made by financial enterprises are

usually classified as operating activities since they relate to the main revenue-producing

activity of that enterprise.

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Investing Activities

The separate disclosure of cash flows arising from investing activities is important

because the cash flows represent the extent to which expenditures have been made for

resources intended to generate future income and cash flows. Examples of cash flows

arising from investing activities are:

(a) Cash payments to acquire fixed assets (including intangibles).

These payments include those relating to capitalized research and development costs and

self-constructed fixed assets;

(b) Cash receipts from disposal of fixed assets (including intangibles); Cash Flow

Statements

(c) cash payments to acquire shares, warrants or debt instruments of other enterprises and

interests in joint ventures (other than payments for those instruments considered to be

cash equivalents and those held for dealing or trading purposes);

(d) cash receipts from disposal of shares, warrants or debt instruments of other enterprises

and interests in joint ventures (other than receipts from those instruments considered to

be cash equivalents and those held for dealing or trading purposes);

(e) Cash advances and loans made to third parties (other than advances and loans made

by a financial enterprise);

(f) Cash receipts from the repayment of advances and loans made to third parties (other

than advances and loans of a financial enterprise);

(g) cash payments for futures contracts, forward contracts, option contracts and swap

contracts except when the contracts are held for dealing or trading purposes, or the

payments are classified as financing activities; and

(h) Cash receipts from futures contracts, forward contracts, option contracts and swap

contracts except when the contracts are held for dealing or trading purposes, or the

receipts are classified as financing activities.

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When a contract is accounted for as a hedge of an identifiable position, the cash flows of

the contract are classified in the same manner as the cash flows of the position being

hedged.

Financing Activities

The separate disclosure of cash flows arising from financing activities is important

because it is useful in predicting claims on future cash flows by providers of funds (both

capital and borrowings) to the enterprise.

Examples of cash flows arising from financing activities are:

(a) Cash proceeds from issuing shares or other similar instruments;

(b) Cash proceeds from issuing debentures, loans, notes, bonds, and other short or long-term borrowings; and

(c) Cash repayments of amounts borrowed.

REPRTING OF CASH FLOWS

Reporting Cash Flows from Operating Activities

An enterprise should report cash flows from operating activities using either:

(a) The direct method, whereby major classes of gross cash receipts and gross cash

payments are disclosed; or

(b) the indirect method, whereby net profit or loss is adjusted for the effects of

transactions of a non-cash nature, any deferrals or accruals of past or future

operating cash receipts or payments, and items of income or expense associated

with investing or financing cash flows.

The direct method provides information which may be useful in estimating future cash

flows and which is not available under the indirect method and is, therefore, considered

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more appropriate than the indirect method. Under the direct method, information about

major classes of gross cash receipts and gross cash payments may be obtained either:

(a) From the accounting records of the enterprise; or

(b) By adjusting sales, cost of sales (interest and similar income and interest expense and

similar charges for a financial enterprise) and other items in the statement of profit and

loss for:

i) changes during the period in inventories and operating receivables and payables;

ii) Other non-cash items; and

iii) Other items for which the cash effects are investing or financing cash flows.

Under the indirect method, the net cash flow from operating activities is determined by

adjusting net profit or loss for the effects of:

(a) Changes during the period in inventories and operating receivables and payables;

(b) Non-cash items such as depreciation, provisions, deferred taxes and unrealized

foreign exchange gains and losses; and

(c) All other items for which the cash effects are investing or financing cash flows.

Alternatively, the net cash flow from operating activities may be presented under the

indirect method by showing the operating revenues and expenses excluding non-cash

items disclosed in the statement of profit and loss and the changes during the period in

inventories and operating receivables and

Payables.

Reporting Cash Flows from Investing and Financing Activities

An enterprise should report separately major classes of gross cash receipts and gross

cash payments arising from investing and financing activities, except to the extent that

cash flows described in paragraphs 22 and 24 are reported on a net basis.

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Reporting Cash Flows on a Net Basis

22. Cash flows arising from the following operating, investing or financing activities may

be reported on a net basis:

(a) Cash receipts and payments on behalf of customers when the cash flows reflect the

activities of the customer rather than those of the enterprise; and

(b) Cash receipts and payments for items in which the turnover is quick, the amounts are

large, and the maturities are short.

23. Examples of cash receipts and payments referred to in paragraph 22(a) are:

(a) The acceptance and repayment of demand deposits by a bank;

(b) Funds held for customers by an investment enterprise; and

(c) Rents collected on behalf of, and paid over to, the owners of properties.

Examples of cash receipts and payments referred to in paragraph 22(b) are advances

made for, and the repayments of:

(a) Principal amounts relating to credit card customers;

(b) The purchase and sale of investments; and

(c) Other short-term borrowings, for example, those which have a maturity period of

three months or less.

24. Cash flows arising from each of the following activities of a financial enterprise

may be reported on a net basis:

(a) Cash receipts and payments for the acceptance and repayment of deposits with a fixed

maturity date;

(b) The placement of deposits with and withdrawal of deposits from other financial

enterprises; and

(c) Cash advances and loans made to customers and the repayment of those advances and

loans.

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Extraordinary Items

The cash flows associated with extraordinary items should be classified as arising from

operating, investing or financing activities as appropriate and separately disclosed.

The cash flows associated with extraordinary items are disclosed separately as arising

from operating, investing or financing activities in the cash flow statement, to enable

users to understand their nature and effect on the present and future cash flows of the

enterprise. These disclosures are inaddition to the separate disclosures of the nature and amount of extraordinary items

required by Accounting Standard (AS) 5, Net Profit or Loss for the Period, Prior Period

Items and Changes in Accounting Policies.

Interest and Dividends

Cash flows from interest and dividends received and paid should each be disclosed

separately. Cash flows arising from interest paid and interest and dividends received in

the case of a financial enterprise should be classified as cash flows arising from operating

activities. In the case of other enterprises, cash flows arising from interest paid should be

Classified as cash flows from financing activities while interest and dividends received

should be classified as cash flows from investing activities. Dividends paid should be

classified as cash flows from financing activities.

The total amount of interest paid during the period is disclosed in the cash flow statement

whether it has been recognized as an expense in the statement of profit and loss or

capitalized in accordance with Accounting Standard (AS) 10, Accounting for Fixed

Assets.

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Interest paid and interest and dividends received are usually classified as operating cash

flows for a financial enterprise. However, there is no consensus on the classification of

these cash flows for other enterprises. Some argue that interest paid and interest and

dividends received may be classified as operating cash flows because they enter into the

determination of net profit or loss. However, it is more appropriate that interest paid and

interest and dividends received are classified as financing cash flows and investing cash

flows respectively, because they are cost of obtaining financial resources or returns on

investments.

Some argue that dividends paid may be classified as a component of cash flows from

operating activities in order to assist users to determine the ability of an enterprise to pay

dividends out of operating cash flows. However, it is considered more appropriate that

dividends paid should be classified as cash flows from financing activities because they

are cost of obtaining financial resources.

Taxes on Income

Cash flows arising from taxes on income should be separately disclosed and should be

classified as cash flows from operating activities unless they can be specifically identified

with financing and investing activities.

Taxes on income arise on transactions that give rise to cash flows that are classified as

operating, investing or financing activities in a cash flow statement. While tax expense

may be readily identifiable with investing or financing activities, the related tax cash

flows are often impracticable to identify and may arise in a different period from the cash

flows of the underlying transactions. Therefore, taxes paid are usually classified as cash

flows from operating activities. However, when it is practicable to identify the tax cash

flow with an individual transaction that gives rise to cash flows that are classified as

investing or financing activities, the tax cash flow is classified as an investing or

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financing activity as appropriate. When tax cash 5 Pursuant to the issuance of AS 16,

Borrowing Costs, which came into effect in respect of accounting periods commencing

on or after 1-4-2000, accounting for borrowing costs is governed by AS 16 from that

date.

Investments in Subsidiaries, Associates and Joint Ventures

When accounting for an investment in an associate or a subsidiary or a joint venture, an

investor restricts its reporting in the cash flow statement to the cash flows between itself

and the investee/joint venture, for example, cash flows relating to dividends and

advances. Acquisitions and Disposals of Subsidiaries and Other Business Units

The aggregate cash flows arising from acquisitions and from disposals of subsidiaries or

other business units should be presented separately and classified as investing activities.

An enterprise should disclose, in aggregate, in respect of both acquisition and disposal of

subsidiaries or other business units during the period each of the following:

(a) The total purchase or disposal consideration; and

(b) The portion of the purchase or disposal consideration discharged by means of cash

and cash equivalents.

The separate presentation of the cash flow effects of acquisitions and disposals of

subsidiaries and other business units as single line items helps to distinguish those cash

flows from other cash flows. The cash flow effects of disposals are not deducted from

those of acquisitions.

Non-cash Transactions

Investing and financing transactions that do not require the use of cash or cash

equivalents should be excluded from a cash flow statement. Such transactions should be

disclosed elsewhere in the financial statements in a way that provides all the relevant

information about these investing and financing activities.

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Many investing and financing activities do not have a direct impact on current cash flows

although they do affect the capital and asset structure of an enterprise. The exclusion of

non-cash transactions from the cash flow statement is consistent with the objective of a

cash flow statement as these items do not involve cash flows in the current period.

Examples of non-cash transactions are:

(a) The acquisition of assets by assuming directly related liabilities;

(b) The acquisition of an enterprise by means of issue of shares; and

(c) The conversion of debt to equity.

Components of Cash and Cash Equivalents

An enterprise should disclose the components of cash and cash equivalents and should

present a reconciliation of the amounts in its cash flow statement with the equivalent

items reported in the balance sheet.

In view of the variety of cash management practices, an enterprise discloses the policy

which it adopts in determining the composition of cash and cash equivalents.

The effect of any change in the policy for determining components of cash and cash

equivalents is reported in accordance with Accounting Standard (AS) 5, Net Profit or

Loss for the Period, Prior Period Items and Changes in Accounting Policies.

Other Disclosures

An enterprise should disclose, together with a commentary by management, the amount

of significant cash and cash equivalent balances held by the enterprise that are not

available for use by it.

There are various circumstances in which cash and cash equivalent balances held by an

enterprise are not available for use by it. Examples include cash and cash equivalent

balances held by a branch of the enterprise that operates in a country where exchange

controls or other legal restrictions apply as a result of which the balances are not

available for use by the enterprise.

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Additional information may be relevant to users in understanding the financial position

and liquidity of an enterprise. Disclosure of this information, together with a commentary

by management, is encouraged and may include:

(a) The amount of undrawn borrowing facilities that may be available for

future operating activities and to settle capital commitments, indicating

any restrictions on the use of these facilities; and

(b) The aggregate amount of cash flows that represent increases in operating capacity

separately from those cash flows that are required to maintain operating capacity.

The separate disclosure of cash flows that represent increases in operating capacity and

cash flows that are required to maintain operating capacity is useful in enabling the user

to determine whether the enterprise is investing adequately in the maintenance of its

operating capacity. An enterprise that does not invest adequately in the maintenance of its

operating capacity may be prejudicing future profitability for the sake of current liquidity

and distributions to owners.

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CHAPTER-5

CASH FLOWSATATEMENT

ANALYSIS

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VIJAYA DAIRY

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2008.

PARTICULARS

AS AT

31-MAR-2008

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit (Loss)before tax and 3,213,455

Extra extraordinary items

Adjustments for:

Depreciation 23,518,270

Misc. Expenditure Written off 1,450

Profit on Sale of Fixed Assets (156,195)

Other Income (138,959)

Interest Received on FD (417,537)

Operating Profit (Loss) before working capital changes 26,020,484

Adjustments for:

Trade and other receivables 5,368,905

Inventories (598,394)

Trade Payables 35,504,470

Cash generated from operations 66,295,465

Taxes Paid

CASH FLOW BEFORE EXTRAORDINARY

ITEMS 66,295,465

Extraordinary items (Pro. Written back)

Net Cash From Operating Activities 66,295,465

B CASH FROM INVESTING

ACTIVITIES

Purchase of Fixed Assets (23,335,949)

Sale of Fixed Assets

Purchase Investment

Other Income 1,101,770

Net cash used in investing activities (22,234,179)

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VIJAYA DAIRY


PARTICULARS

AS AT

31-MAR-2008

Increase in Share Capital -

Proceeds from Long term barrowings

Repayment of finance/lease liabilities (5,112,701)

Repayment of Unsecured Loans -

NET CASH USED IN FINANCING ACTIVITIES (5,112,701)

Net increase in cash and cash equivalents 38,948,585

Cash and Cash equivalents as at 01-04-2003 31,899,521


(Closing balance)

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Cash Inflow For the Year 2007-08Particulars Amount

Operating profit26,020,48

4

Decrease in Trade & Otherreceivables

5,368,905

Trade Payables33,127,25

0

Other Income1,101,77

0

During the year cash inflows are operating profit Rs.2,60,20,484/-, decrease in trade

recievables Rs.53,68,905/-, increase in trade payables Rs.3.31,27,250/-.

Cash Inflow For the Year 2007-08

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

Operating

profit

Decrease in

Trade & Other

receivables

Trade

Payables

Other Income

Items

A

mountinRs.

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Cash Outflow For the Year 2007-08

Particulars Amount

Inventories 598,394

Purchase of Fixed Assets 23,335,949

Long term borrowings 5,112,701

During the year cash outflows are increase in Inventories Rs.5,98,394/-, purchase of

Fixed assets Rs.2,33,35,949/- and decrease in Long term Borrowings Rs.51,12,701/-

Interpretation: During the year 2007-08 Major cash inflows are operating profit,

Decrease in Trade and other receivables and increase in Trade Payables. Major cash

outflows are Purchase of Fixed assets and Repayment long term Loans.


0

5000000

10000000

15000000

20000000

25000000

Inventories Purchase of Fixed

Assets

Long term

borrowings

Items

AmountinRs.

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VIJAYA DAIRYCASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2009.

PARTICULARS

AS AT

31-MAR-2008




Adjustments for:




Other Income (96,497)

Interest Received on FD (452,915)


Adjustments for:


Inventories (2,529,376)

Trade Payables (54,287,819)

Cash generated from operations (31,283,105)

Taxes Paid (153,173)


ITEMS (31,436,278)


Net Cash From Operating Activities (31,436,278)

B CASH FROM INVESTING ACTIVITIES Purchase of Fixed Assets (7,584,548)

Sale of Fixed Assets

Purchase Investment (58,580)

Other Income 630,412


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PARTICULARS

AS AT

31-MAR-2008

Increase in Share Capital 25,000,000

Proceeds from Long term barrowings


Repayment of Unsecured Loans (7,000,000)

NET CASH USED IN FINANCING ACTIVITIES 478,245

Net increase in cash and cash equivalents (37,970,749)



(Closing balance)

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Particulars Amount

Operating Profit 24,288,581

Trade & Other receivables 1,245,509

Other Income 630,412

Increase in share capital 25,000,000

During the year cash inflows are operating profit Rs.2,42,88,581/-, decrease in Trade and

other receivables Rs.12,45,509/- and Increase in share capital 2,50,00,000/-.


0

5000000

10000000

15000000

20000000

2500000030000000

Operating Profit Trade & Other

receivables

Other Income Increase in

share capital

Items

AmountinRs.

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Particulars AmountInventories 2,529,376

Trade Payables 50,678,440

purchase of fixed assets 7,584,548

purchase of investments 58,580

Repayment of Finance 17,521,755

Repayment of Unsecured loans 7,000,000

During the year cash outflows are increase in Inventory Rs.25,29,376/-, Decrease in

Trade Payables Rs.5,06,78,440/-, purchase of Fixed assets Rs.75,84,548/-, repayment of

loans Rs.1,75,21,755/-, and repayment Unsecured Loans Rs.70,00,000/-.


0

10000000

20000000

30000000

40000000

50000000

60000000

Inventories Trade

Payables

purchase of

fixed assets

purchase of

investments

Repayment

of Finance

Repayment

of Unsecured

loans

Items

AmountinRs.

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Interpretation: During the year 2008-09 Major cash inflows are Operating Profit and

Increase in share capital. Major cash outflows are Decrease in current liabilities, Purchase

of fixed assets and repayment of long-term loans and unsecured loans.

VIJAYA DAIRY


PARTICULARS

AS AT

31-MAR-2009




Adjustments for:Depreciation 13,246,222


Profit on Sale of Fixed Assets 1,798,976


Adjustmentsfor:

Trade and other receivables (39,862,080)


Trade Payables & Provisions (7,093,419)Cash generated from operations (8,389,457)


ITEMS (8,389,457)



B CASH FROM INVESTINGACTIVITIES


Sale of Fixed Assets 7,318,835

Investment in Subsidiaries (23,000,000)

Profit on Sale of Investments & Other Income 723,352


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PARTICULARS

AS AT

31-MAR-2009


Proceeds from Long term barrowings 22,048,597


NET CASH USED IN FINANCING ACTIVITIES 61,788,453



Cash and Cash equivalents as at 01-04-2006

40,057,643

(Closing balance)

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Cash Inflow For the Year 2008-09Particulars Amount

Operating profit45,329,0

42

Sale of Fixed Assets7,318,8

35

profit on sale of investments & OtherIncome

723,352

Increase in Share Capital57,300,0

00

Secured loans

22,048,5

97

During the year cash inflows are operating profit Rs.4,53,29,042/-, sale of fixed assets

Rs. 73,18,835/-, Increase in share capital Rs.5,70,00,000/-, and increase in long term

borrowings Rs.2,20,48,597/-.


0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

Operating profit Sale of Fixed

Assets

profit on sale of

investments &

Other Income

Increse in Share

Capital

Secured loans

Items

Am

ountinRs.

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Cash Outflow For the Year 2008-09Particulars Amount

Trade & Other Receivables 39,862,080

Inventories 6,763,000

Trade Payables & Provisions 7,093,419

Purchase of Fixed assets 31,260,897

Investment on subsidiaries 23,000,000

Repayment of Liabilities 17,560,144

During the year cash outflows are Increase in Trade & other receivables Rs.3,98,62,080/-,

Increase in Inventories Rs. 67,63,000/-, decrease in Trade Payables Rs.70,93,419/-,purchase of fixed assets 3,12,60,897/-, Investment in Subsidiaries (Navabarat Fertilizers

Limited) Rs.2,30,00,000 and Repayment of loans 1,75,60,144 /-.

Interpretation: During the year 2008-09 Major cash inflows are Operating profit,

Increase in share capital and Proceeds from Long term Loans. Major Cash outflows are


0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000

45000000

Trade & Other

Receivables

Inventories Trade

Payables &

Provisions

Purchace of

Fixedassets

Investment on

subsidaries

Repayment of

Liabilities

Items

AmountinRs.

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Increase in current assets, Purchase of fixed assets, Investments in Subsidiaries and

repayment of loans.


PARTICULARS

AS AT

31-MAR-2010




Adjustments for:




Profit on Sale of Investment (7,625,356)

Interest Received (346,360)

Other income (42,000)


Adjustments for:

Trade and other receivables (60,665,419)


Trade Payables & Provisions (2,125,289)



ITEMS (28,667,758)



B CASH FROM INVESTING

ACTIVITIES



Investment in Subsidiaries (80,000,000)

Profit on Sale of Investments & Other Income 8,013,716


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VIJAYA DAIRY


PARTICULARS

AS AT31-MAR-2010


Proceeds from Long term barrowings 71,883,646



Net increase in cash and cash equivalents (27,861,369)



(Closing balance)

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Cash Inflow for the year 2009-10

Particulars Amount

operating profit 80,755,936


profit on sale of investments& other

income 8,013,716


Long term borrowings 71,883,646

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During the year Cash inflows are Operating Profit Rs.8,07,55,936/-, Sale of Fixed assets

Rs.1,30,29,407 /-, Profit on Sale of Investments Rs.80,13,716/-, Increase in Share

Capital Rs.6,92,93,720/- and working Capital loans 7,18,83,646/-.

Cash Outflow For the year 2009-10

Particulars Amount



Trade payables & provisions 2,125,289

Purchase of fixed assets 79,567,583

Investments in Subsidiaries 80,000,000

Repayment of Finance 1,846,518

Cash Inflow For the year 2009-10

0

10000000

20000000

30000000

40000000

50000000

60000000

7000000080000000

90000000

operating

profit

profitonsal

e

of

investments&

otherincom

e

Longterm

borrowings

Items

AmountinRs.

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During the year Cash outflows are Increase in Trade receivables Rs.6,06,65,419/-,

Increase in Inventories Rs.4,66,32,986/-, Purchase of fixed assets

Rs.7,95,67,583/,Investments in subsidiaries (Navabarat Fertilizers Limited) Rs

8,00,00,000/-.

Interpretation: During the year 2009-10 Major Cash inflows are Operating Profit, Sale

of Fixed assets, Profit on sale of Investments, Increase in Share Capital and working

capital loan. Major Cash outflows are Increase in Trade and other receivables, increase in

Inventories, purchase of fixed assets, Investments in subsidiaries and Repayment Long-

term loans

VIJAYA DAIRY


PARTICULARS

AS AT

31-MAR-2011




Adjustments for:


Misc. Expenditure Written off

1,45

0


0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

90000000

Trade &

Other

receivables

Inventories Trade

payables &

provisions

Purchase of

fixed assets

Investments

in

Subsidaries

Repayment

of Finance

Items

AmountinRs.

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Profit on Sale of Fixed Assets -

Profit on Sale of Investment -

Interest Received -

Other income

(4,632,

,005)


Adjustments for:


Inventories(47,179,55

2)

Trade Payables & Provisions 1,511,055


74,458,827

CASH FLOW BEFORE EXTRAORDINARY ITEMS - Extraordinary items (Pro. Written back)

Net Cash From Operating Activities 74,458,827

B .CASH FROM INVESTING ACTIVITIES

Purchase of Fixed Assets

(68,052,94

7)


Investment in Subsidiaries -

Profit on Sale of Investments & Other Income 4,632,005

Net cash used in investing activities 23,157,573

VIJAYA DAIRY


PARTICULARS

AS AT

31-MAR-2011

Increase in Share Capital -

Increased in Bank barrowings 2,379,276

Loan from Directors (16,800,000)



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(Closing balance)

Cash Inflow for the year 2010-11

Particulars Amount

operating profit 90,338,501

Sale of Fixed Assets 12,119,688profit on sale of investments& otherincome 4,632,005

Bank borrowings 2,379,276

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Cash inflow for the year 2010-11

During the year Cash inflows are Operating Profit Rs. 90,338,501/-, Sale of Fixed assets

Rs. 12,119,688/-, Profit on Sale of Investments Rs. 4,632,005/-, Decrease in Bank

borrowings 2,379,276/-.

Cash Outflow For the year 2010-11

Particulars Amount



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Trade payables & provisions 1,511,055

Purchase of fixed assets 68,052,947

Sale of fixed asset 12,119,688

During the year Cash outflows are Increase in Trade receivables Rs.29,788,823/-,

Increase in Inventories Rs. 47,179,552 /-, Purchase of fixed assets Rs. 68,052,947 /, Sale

of fixed asset

Rs 12,119,688 /-.

Interpretation: During the year 2010-11 Major Cash inflows are Operating Profit, Sale

of Fixed assets, Profit on sale of Investments, Decrease in Bank barrowings. Major Cash

outflows are Increase in Trade and other receivables, Increase in Inventories and

purchase of fixed assets, Decrease in Sale of fixed asset.

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CHAPTER-6

FINDINGS

FINDINGS

Major Cash outflows are relating to acquisition of Fixed Assets.

The company has invested in its Subsidiary company Navabarat Fertilizers

Limited Rs 10,30,00,000/- With 100% equity.

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The Company is having Cash Credit limit With Yes Bank Limited Upto

Rs. 7,50, 00,000 to meet its day to day cash requirements.

The company is having sustainable growth in Operating profit.

Major cash outflows are purchase of fixed assets and Investments in subsidiaries

Major Cash inflows are operating profit and increase in trade and other

receivables.

During the five years non cash expenditure is Depreciation and Miscellaneous

Expenses.

During the period the company has increased its share capital to

Rs.13,29,00,000/-

During the period the company has positive cash flows from operating activities

During the period the company has negative cash flows from investing activitiesby Purchase of fixed assets and investments

During the period the company has Positive cash flows from Financing activities

by increase in Share capital and Working capital loans.

The company is having growth in its revenue sales revenue

During the period the company did not made any credit sales

Increase in Trade receivable in the year 2009-10 due to dues with customers

The company has taken hypothecation loans from different banks byhypothecation of vehicles.

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CHAPTER-7

SUGGESTIONS

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SUGGESTIONS

The management has to prepare cash budget periodically to know the

requirement of the cash

The company can take working capital loans from banks.

The company can take Term loans from banks to acquire fixed assets and toexpand the business.

The company has to increase revenue by increasing in sales.

The cash credit limit with Yes bank has to increase to expand the operations of

the company.

Sometimesthere are surplus funds. it is necessary to mobilize the funds intoinvesting activiteies .

The management of the company has to prepare budgeted cash statements.

The company has to increase its cash flow from operating activities instead ofincrease in share capital.

The company has to increase in its investments.

The company has to prepare strategy for expanding the operations.

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BIBLOGRAPHY

PRASANNA CHANDRA FINANCIAL MANAGEMENT

Tata Mcgraw-hill Publicating Company

Fifth Edition

I.M.PANDEY FINANCIAL MANAGEMENT

Himalaya Publications

Eighth edition

M.Y.KAHAN&P.K.JAIN FINANCIAL MANAGEMENT

Tata Mcgraw-hill Publication

Company

Third Edition

R.K.SHARMA FINANACIAL MANAGEMENT

SHASI K.GUPTHA Kalyani publications

First edition

Dr.S.N.MSHESHWARI FINANACIAL MANAGEMENT

Principals and practice

Sulthan chand and sons

Seventh edition

JOURNALS FINANCIAL MANAGEMENT

BUSINESS LINE

BUSSINESS STANDARDS

Cashflow Project+Sandhya

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