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CASH FLOW STATEMENT ( AS-3). It is an additional information to user of financial statement. Exhibits flow of incoming and outgoing Cash Assesses ability of the enterprise to generate cash and utilize the same. A tool for assessing liquidity and solvency of the enterprise.
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CASH FLOW STATEMENT ( AS-3) It is an additional information to user of financial statement. Exhibits flow of incoming and outgoing Cash Assesses ability of the enterprise to generate cash and utilize the same. A tool for assessing liquidity and solvency of the enterprise.
CASH FLOW STATEMENT ( AS-3) • Applies to:- • Enterprises with turnover of more than Rs. 50 crores in a financial year. • Listed companies- to be presented under the Indirect Method. • Under Direct Method- cash inflows and outflows is directly stated under the three heads • Under Indirect Method- Cash flow from operating activities is arrived at by taking Net profit and adding back non-cash exp./losses and adjusting for working capital to find cash generated from operations.
CASH FLOW STATEMENT ( AS-3) • Cash Movements under different heads:- • Operating activities • Investing activities( cash from fixed assets, debt and equity instruments-acquired or disposed) • Financing activities( cash from debt & equity flows and dividend/interest paid thereon.) Sum of these three reflect net increase or decrease in cash or cash equivalent Cash: consists of cash in hand and demand deposits Cash equivalent: consists of short term highly liquid investments with maturity of less than 3 months.
CASH FLOW STATEMENT ( AS-3) • Care:- • Interest recd. From investment is an inflow in investment activity • Interest received from short term investments( upto 90 days)-inflow from operating activity • Interest paid on loans/debts is inflow from financing activity • Interest on working capital loan is inflow from operating activity.
CASH FLOW STATEMENT ( AS-3) • Care: Dividend recd for Financial enterprises is inflow in operating activity • For other than financial enterprises it is inflow from Investing activity. • Dividend paid is always classified as financing activity • Effect due to changes in exchange rates to be shown separately as reconciliation. • Unrealised gains/losses from changes in exchange rates are not cash flows.
