This section of the report will focus on the analysis of the statement of cash flow for Debenhams Plc. based on the company annual report for the year 2012. Appendix 1 is the statement of cash flow for the year ended 2012 which was taking from Debenhams Plc. annual report.
The Major part that needs to be observed in the cash flow statement is the change in net cash and cash equivalent of the current year comparison to the previous financial year. As shown in the statement of cash flow in the annual report, the net cash and cash equivalent for Debenhams Plc. had increase by £22.8m to £34.6m. The substantial change was a result of less finance cost and tax paid. This implies that Debenhams Plc. continue to benefit from its profit or loss account and consequently well placed to chase future business activities and respond successfully to active market condition. The statement of cash flow contains of three significant parts: operating, investing and financing activities which will be reflected in agreement with the analysis of Debenhams business activities.
Operating Activities
The first part of the cash flow forecast which is the operating activities relates to the statement of profit or loss account of the group. Operating activities deals with cash flow in relative to its normal nature of business over the course of the financial year. In authority to IAS7, non-cash flow has to be added or take away back from the profits to resolve the cash flow with its operating activities. The gross transaction value (measure of overall Sales) increased by 2.6 % in the financial year. This rise was driven by like-for- like sales which is the measurement of annual performance sales growth in stores and online in the UK and internationally businesses. Online sales were one of the strong growing areas with an increase of 39.8% compared to the previous year of 28.5%. The reason for this was due to not only increase of 54 % of customer capacity visiting Debenhams.com but also arise in choice of products, brands and ways to shop. Debenhams Plc profitability has increase in financial year 2012 in contrast to 2011, the profit in 2011 were £117.2m and now £125.3m. The main reasons of the growth were higher sales and lower interest charge which has reduced the net debt and lower the funding costs PAGE 6 According to the annual report a reduction in the co-operate tax and finance cost had increase the profitability. Additionally, with looks to its operating activities, the cash generated from operation was less than the previous year from £267.6 million to £259.7 in the year 2012. This was due to the loss of disposal of plant, property and equipment amounting £0.2 million and decrease in finance income £1.2 million compare to the previous year of £3.9 million. However a decrease in finance cost from £27.3m in 2011 to £17.9m in the financial year had reduced the group cost. There was also a decrease in inventories for the year 2012 which was amounted £11.5m. There was an increase in trade and other receivable in the year 2012 which amounted £4.7m.
On the other hand there is a substantial different with concerns to the payment made to trade payables in the financial year 2011 and 2012, as shown in the financial report trade payables is £32.4m in the 2012 compare to £5.8m in the year 2011. The consolidated net cash inflows from operating activities documented a sum of £201.5m at the end of the financial year.
Investing Activities
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Investing activities in the cash flow statement contain operation to the sale and