Report Name SAP REPORT T-CODE
Cash Flow (Direct Method) S_ALR_87012271
Cash Flow (Indirect Method) Variant 1 S_ALR_87012272
Cash Flow (Indirect Method) Variant 2 S_ALR_87012273
CASH FLOW STATEMENT EXAMPLES
AS PER DIRECT METHOD
Cash flow from Operating activities
Add: Operating cash receipts: (A)
Cash sales xxx
Cash received from customers xxx
Trading commission received xxx
Royalties received xxx xxx
Less: Operating cash payments: (B)
Cash purchase (xxx)
Cash paid to suppliers (xxx)
Cash paid for business expenses (xxx) (xxx)
Cash generated from operations (A-B) = (C) xxx
Less: Income tax paid (Net of tax refund received) (D) (xxx)
Cash flow before extraordinary items (C-D) = (E) xxx
Adjusted extraordinary items (+/) (F) xxx
Net cash flow from operating activities (E-F) = (G) xxx
Cash flow from investing activities (calculation same as under xxx
indirect method) (H)
Cash flow from financing activities (calculation same as under xxx
indirect method) (I)
Net increase in cash and cash equivalents (G+H+I) = (J) xxx
Cash and cash equivalents and the beginning of the period (K) xxx
Cash and cash equivalents and the end of the period (J+K) xxx
CASH FLOW STATEMENT EXAMPLES
AS PER INDIRECT METHOD
I. Operating Activities
The cash flow from operating activities are derived under two
stages;
A. Calculating the operating profit before changes in working
capital
B. The effect of changes in working capital
Stage 1: Operating profit before changes in working
capital can be calculated as follows:
Net profit before Tax and extra ordinary Items xxx
Add: Non-cash and non-operating Items which have already been
debited to profit and Loss Account like;
Depreciation xxx
Amortisation of intangible assets xxx
Loss on the sale of Fixed assets xxx
Loss on the sale of Long-term Investments xxx
Provision for tax xxx
Dividend paid xxx xxx
Less: Non-cash and Non-operating Items which have already been
credited to Profit and Loss Account like
Profit on sale of fixed assets xxx
Profit on sale of Long term investment xxx xxx
Operating profit before working Capital changes xxx
Stage 2: Effect of changes in Working Capital is to be
taken into as follows:
a. Current Assets
i. An increase in an item of current assets
causes a decrease in cash inflow because
cash is blocked in current assets
ii. A decrease in an item of current assets
causes an increase in cash inflow because
cash is released from the sale of current
assets
b. Current Liabilities
i. An increase in an item of current liability
causes a decrease in cash outflow because
cash is saved
ii. A decrease in an item of current liability
causes an increase in cash outflow because
of payment of the liability
Thus, in a nutshell
Cash from operating activities = Operating profit
before working capital changes + Net decrease in
current assets + Net Increase in current liabilities –
Net increase in current assets – Net decrease in
current liabilities
II. Investing Activities
The cash flow from investing activities is derived by adding
all the cash inflows from the sale or maturity of assets and
subtracting all the cash outflows from the purchase or
payment for new fixed assets or investments.
Cash flow arising from Investing activities typically are:
i. Cash payments to acquire Fixed Asset
ii. Cash receipts from disposal of fixed asset
iii. Cash payments to acquire shares or debenture
investment
iv. Cash receipts from the repayment of advances and
loans made to third parties
Furthermore,
Examples of Cash inflow from investing activities are:
i. Cash sale of plant and machinery, land and
Building, furniture, goodwill etc
ii. Cash sale of investments made in the shares and
debentures of other companies
iii. Cash receipts from collecting the Principal amount
of loans made to third parties
Examples of Cash outflow from investing activities are:
i. Purchase of fixed assets i.e. land, Building,
furniture, machinery etc
ii. Purchase of Intangible assets i.e. goodwill,
trademark etc
iii. Purchase of shares and debentures
iv. Purchase of Government Bonds
v. Loan made to third parties
III. Financing activities
Cash flows from financing activities are the cash paid and
received from activities with non-current or long-term
liabilities and shareholder’s capital.
Cash flow arising from Financing activities typically are:
1. Cash proceeds from the issue of shares or other
similar instruments
2. Cash proceeds from the issue of debentures,
loans, notes, bonds, and other short-term borrowings
3. Cash repayment of the amount borrowed
Examples of cash inflow from financing activities are:
i. The issue of Equity and preference share capital for
cash only
ii. The issue of Debentures, Bonds and long-term
note for cash only
Examples of cash outflow from financing activities are:
i. Payment of dividends to shareholders
ii. Redemption or repayment of loans i.e. debentures
and bonds
iii. Redemption of preference share capital
iv. Buyback of equity shares
Illustration of Indirect method:
Net profit before Tax and extra ordinary Items xxx
Cash flow from Operating activities
Add: Non-cash and non-operating Items which have already been
debited to profit and Loss Account like;
Depreciation xxx
Amortisation of intangible assets xxx
Loss on the sale of Fixed assets xxx
Loss on the sale of Long-term Investments xxx
Provision for tax xxx
Dividend paid xxx xxx
Less: Non-cash and Non-operating Items which have already been
credited to Profit and Loss Account like
Profit on sale of fixed assets (xxx)
Profit on sale of Long term investment (xxx) (xxx)
Operating profit before working Capital changes (A) xxx
Changes in working capital:
Add: Increase in current liabilities xxx
Decrease in current assets xxx xxx
Less: Increase in current assets (xxx)
Decrease in current liabilities (xxx) (xxx)
Net increase / decrease in working capital (B) xxx
Cash generated from operations (C) = (A+B) xxx
Less: Income tax paid (Net tax refund received) (D) (xxx)
Cash flow from before extraordinary items (C-D) = (E) xxx
Adjusted extraordinary items (+/) (F) xxx
Net cash flow from operating activities (E+F) = (G) xxx
Cash flow from Investing activities
Proceeds from sale of fixed assets xxx
Proceeds from sale of investments xxx
Purchase of shares/debentures/fixed assets (xxx)
Net cash from investing activities (H) xxx
Cash flow from Financing activities
Proceeds from issue of shares xxx
Proceeds from issue of debentures xxx
Payment of dividend (xxx)
Net cash flow from financing activities (I) xxx
Net increase in cash and cash equivalents (G+H+I) = (J) xxx
Cash and cash equivalents and the beginning of the period (K) xxx
Cash and cash equivalents and the end of the period (J+K) xxx
