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Cash flow using Indirect method

Please solve the cash flow pro forma case study attached considering all hints and create the business report.

See *ATTACHED* file for complete details!


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Depreciation: No building were sold or purchased. So the difference in accumulated depreciation is 50-20=30m. But for plants and machinery, 10m was charged to disposed assets. So we must increase the difference by 10m as that was part of the depreciation expense in 2006 but not in 2007. Thus for Plants and Machinery we have 50-30+10=30m. Thus, total depreciation expense will be 30m+30m = 60m

Debtors/Receivables: Simply do 38-32 = 6. There is a decrease in receivables which means more cash has been collected and hence the positive difference.

Creditors/Payables: Simply do 15-10. There is an increase in payables which means less cash has been distributed and thus the positive number.

Taxation paid: Given to be 15m. This is given in the case. So there is no need for calculations

Payments to Acquire Fixed Assets: 100m for building and 15m for P&M. Building asset account increased from 100m to 200m so 100M more was purchased. 15m of new P&M was purchased. This is because we sold 15m, but the ending balance is still 100m in this ...

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The solution goes into a great amount of detail related to the cash flow question being asked. The solution is very easy to follow along and can be easily understood by anyone with a basic understanding of the concepts. The solution answers all the question(s) being asked in a succinct way. Overall, an excellent response.