ACKNOWLEDGEMENT
In performing our Assignment, we had to take the help and
guideline of the one, who deserves our greatest gratitude.
The completion of this assignment gives us much Pleasure.
We would like to show our gratitude to Sir Nauman Nazir,
University of Central Punjab, Faisalabad, for giving us this
assignment the purpose of which was to increase our
knowledge and to do some practical work.
Accounting Cash Flow:
PARTICULARS
AMOUNT ($)
251,000
Cash, beginning of year
OPERATING ACTIVITY:
Net Income
Plus: Depreciation
: Deferred Taxes
AMOUNT ($)
Add: Increase in A/P
742,000
159,000
109,000
1,010,000
17,000
Decrease in Inventory
Less: Increase in other CA
14,000
9,000
Increase in Accounts Receivable
31,000
Decrease in Other CL
99,000
Net Cash From Operating Activities
902,000
INVESTING ACTIVITY
Sale of Fixed Assets
Purchase of Fixed Assets
Net Cash from Investments
FINANCING ACTIVITY
Equity Repurchased
Equity Sold
139,000
(786,000)
(647,000)
(40,000)
11,000
Debt Raised
Debt Retired
118,000
(98,000)
Dividends Paid
(212,000)
Increase in Accounts Payable
Net Cash from Financing
5,000
(216,000)
Net Increase in Cash
39,000
Cash End of Year
290,000
Financial Cash Flow:
Cash Flow from Assets = Cash Flow Paid To Creditors + Cash Flow Paid To Equity
Investor
Cash Flow from Assets = Operating Cash Flow – Net Capital Spending – Changes in
Net Working Capital
Following calculations will be made :
 Operating Cash Flow:
Operating Cash Flow = EBIT + Depreciation - Tax
= 1332 + 159 - 386
= 1,105
 Net Capital Spending :
NCS= Ending Net Fixed Assets – Beginning Net Fixed Assets + Depreciation
= 2,280 – 1,792 + 159
= 747
 Changes in Net Working Capital :
Changes in Net Working Capital = Ending NWC – Beginning NWC
= (1219-491) - (1154-568)
= 728 - 586
= 142
Cash Flow From Assets
Particulars
Operating Cash Flow
Less: (Net Capital Spending)
(Changes in NWC )
Cash Flow From Assets
Amount $
1105
(647)
(142)
316
Cash Flow To Creditors
Particulars
Interest Paid
Less: Net New Borrowing
Amount $
95
(20)
Cash Flow To Creditors
75
Cash Flow to Stockholders
Particulars
Dividends Paid
Less: Equity Raised
: Surplus Raised
Add: Treasury Stock Raised
Cash Flow to Stockholders
Amount $
212
(1 )
(10)
40
(241)
Cash Flow to Investors:
= Cash Flow To Creditors + Cash Flow to Stockholders
= 75+ 241
= 316
Cash Flow from Assets = Cash Flow to Investors
Requirement # 1
How would you describe Warf Computers’ cash flows?
According to Warf Computer’s Cash Flows:
 It is having inflows from operating activities on the other hand outflows from
financing activities.
 But overall there is cash inflow in the Firm which shows a good cash generating
ability of Warf Computers.
 So, Financial Investors can consider investing in this firm because its cash flows
are positive and there is less chance of bankruptcy.
Requirement # 2
Which cash flow statement more accurately describes the
cash flows at the company?
From Investment Point of View, Accounting Cash flow more accurately describes cash
flows at the company because:
 It shows the investors each activity and the cash generation from the activities
separately..
 Benefit to Investors is shown through this statement that can attract investors that
me be debt holders or stockholders
 All expenses and revenues to the year, investments and financial position is
shown through this statement.
 Investors can take decision at a glance by seeing the statement that whether they
should invest or not.
Requirement # 3
In light of your previous answers, comment on Nick’s
expansion plans.
Nick’s Expansion Plan is favorable because:
 Even By Raising amount of Debt, Increasing Equity and Investing in Fixed Assets
it have a positive cash flows according accounting cash flow statement.
 It can continue with this plan as it will give him revenues in the long run.