1

Proforma Cash Flow Statement of Chemalite for 1992 (Indirect Method)

Particulars
Operating Cash Flow
Net Income
(+)
Depreciation
Amortization of Patent
Depreciation of Inventory
Increase in DTL
(-)
Increase in A/R
Increase in Raw Material Inventory
Increase in Finished Goods Inventory
Increase in Prepaid Insurance
Decrease in Taxes Payable
Gain on Sale of Machines
Net Cash Flow from Operation Activities
Investing Cash Flow
(+)
Receipts from Sale of Machines
(-)
Purchase of New Machines
Purchase of New Production Facility
Net Cash Flow from Investing Activities
Financial Cash Flow
(+)
Long term debts
Short term debts
(-)
Treasury Stock
Dividends Paid
Net Cash Flow from Financing Activities
Opening Cash Balance
Net Cash Flow
Closing Cash Balance

992 (Indirect Method)

Amount
Claculations
$
$
$
$
$
$
$
$
$
$
$
$

118,995
61,625
25,000
5,000
26,730
-70,030
-20,450
-104,680
-65,000
-950
-24,250
-48,010

$
$
$
$

215,500
-520,000
-425,000
-729,500

$
$
$
$
$

510,000
200,000
-26,000
-10,000
674,000

$
$
$

113,000
-103,510
9,490

Machine BV
Machine sold at
Depriciation/year

$ 212,500
$ 215,500
$
21,250

Production Facility
Land
Building
Depriciation/year
P1 92
P2 94
P3 95
P3 96

$
$
$
$
$
$
$
$

New Mahcines
Depriciation/year

$ 520,000
$
52,000

850,000
250,000
600,000
85,000
425,000
141,667
141,667
141,667

No. of Shares
Price/Share
Repurchase Shares

20,000
1.3
26,000

$
$

LTD
STD

$ 510,000
$ 200,000

91 Dividend
92 Dividend
Common Stock

0.02 $
10%
500000

10%

10,000

Proforma Cash Flow Statement of Chemalite for 1992 (Direct Method)

Particulars
Operating Cash Flow
(+)
Cash Received from Sales
(-)
Expenses
Raw Material
Finised Goods Inventory
(-)
Labour
Insurance
Rent
Utilities
Advertising
S&A Expenses
Interest Expense
R&D Expenses
Tax Expense
Net Cash Flow from Operation Activities
Investing Cash Flow
(+)
Receipts from Sale of Machines
(-)
Purchase of New Machines
Purchase of New Production Facility
Net Cash Flow from Investing Activities
Financial Cash Flow
(+)
Long term debts
Short term debts
(-)
Treasury Stock
Dividends Paid
Net Cash Flow from Financing Activities
Opening Cash Balance
Net Cash Flow
Closing Cash Balance

Main sources and uses of cash

Sources
Cash from Sales
Cash from Sales of Machines
Long Term Debt
Short Term Debt

Recommendations
A
B
C

Reduce credit time of borrowers from 40 days to 30 days, thereby increa

Reduce inventory of finished goods. Management to decide an optimum
Look to source raw material and other supplies on credit. This will help t

1992 (Direct Method)

Amount
Claculations
$

1,816,220

$
$
$
$
$
$
$
$
$
$
$
$

-473,150
-99,680
-660,000
-97,500
-25,000
-82,000
-70,000
-195,750
-58,750
-63,250
-39,150
-48,010

$
$
$
$

215,500
-520,000
-425,000
-729,500

$
$
$
$
$

510,000
200,000
-26,000
-10,000
674,000

$
$
$

113,000
-103,510
9,490

$
$
$
$

1,816,200
215,500
510,000
200,000

Machine BV
Machine sold at
Depriciation/year

$ 212,500
$ 215,500
$
21,250

Production Facility
Land
Building
Depriciation/year
P1 92
P2 94

$
$
$
$
$
$

P3 95
P3 96

$ 141,667
$ 141,667

New Mahcines
Depriciation/year

$ 520,000
$
52,000

850,000
250,000
600,000
85,000
425,000
141,667

No. of Shares
Price/Share
Repurchase Shares

$
$

LTD
STD

$ 510,000
$ 200,000

91 Dividend
92 Dividend
Common Stock

Uses
Purchase of New Machines
Purchase of New Facility
Raw Material
Labour
S&A Expenses

20,000
1.3
26,000
10%

0.02 $
10%
500000

10,000

$
$
$
$
$

520,000
425,000
473,150
660,000
195,750

s to 30 days, thereby increasing cash flow, reducing A/R and reducing short term borrowing liabilities
ment to decide an optimum level. Unsold products increases opportunity costs and reduces cash flow.
es on credit. This will help to maintain cash flow at firm's end.

borrowing liabilities
d reduces cash flow.