Workshop 4
Cash Flow Statement Questions

You are required to attempt the following questions, which are based on topic 4 covered in lecture 7 – The cash flow statement.

Question 1 – The difference between profit and cash generated
Name and explain 6 reasons why the profit made during an accounting period is different from the cash generated during the same period.

Question 2 – Preparing a cash flow statement
This question is taken from a past exam paper (Jan 2012).
The following information relates to Acme Ltd:

31 March 2011
£’000
31 March 2010
£’000
Trade receivables
378
325
Trade payables
210
243
Inventories
180
206
Prepayments
85
110
Accruals
66
50

Year to 31 March 2011
£’000

Profit before taxation
2,566

Interest expense
120

Depreciation expense
275

Note: The interest expense was paid in full during the year.
Required:
(a) Calculate Acme Ltd’s cash flow from operating activities part of the Cash Flow Statement for the year to 31 March 2011 based upon the above information.
(b) Identify the names of the other two main parts of the Cash Flow Statement and provide examples of two types of cash flow that might appear under each of the other two parts of the Cash Flow Statement.

Question 3 – Interpreting a Cash Flow Statement
The cash flow statement below (with comparative figures for the previous year) is for Macclesfield plc, a wholesaler of women’s clothing:

Macclesfield plc
Cash Flow Statement for the year ended 30th September 2013

Year to 30/09/13
£m
Year to 30/09/12
£m

Cash generated from