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1 Proforma Cash Flow Statement of Chemalite for 1992 (Indirect Method)
Particulars Amount
Operating Cash Flow
Net Income $ 118,995 (+) Depreciation $ 61,625 Amortization of Patent $ 25,000 Depreciation of Inventory $ 5,000 Increase in DTL $ 26,730 (-) Increase in A/R $ -70,030 Increase in Raw Material Inventory $ -20,450 Increase in Finished Goods Inventory $ -104,680 Increase in Prepaid Insurance $ -65,000 Decrease in Taxes Payable $ -950 Gain on Sale of Machines $ -24,250 Net Cash Flow from Operation Activities $ -48,010
Investing Cash Flow
(+) Receipts from Sale of Machines $ 215,500 (-) Purchase of New Machines $ -520,000 Purchase of New Production Facility $ -425,000 Net Cash Flow from Investing Activities $ -729,500
Financial Cash Flow
(+) Long term debts $ 510,000 Short term debts $ 200,000 (-) Treasury Stock $ -26,000 Dividends Paid $ -10,000 Net Cash Flow from Financing Activities $ 674,000
92 Dividend 10% Common Stock 500000 2 Proforma Cash Flow Statement of Chemalite for 1992 (Direct Method) Particulars Amount
Operating Cash Flow
(+) Cash Received from Sales $ 1,816,220 (-) Expenses Raw Material $ -473,150 Finised Goods Inventory $ -99,680 (-) Labour $ -660,000 Insurance $ -97,500 Rent $ -25,000 Utilities $ -82,000 Advertising $ -70,000 S&A Expenses $ -195,750 Interest Expense $ -58,750 R&D Expenses $ -63,250 Tax Expense $ -39,150 Net Cash Flow from Operation Activities $ -48,010
Investing Cash Flow
(+) Receipts from Sale of Machines $ 215,500 (-) Purchase of New Machines $ -520,000 Purchase of New Production Facility $ -425,000 Net Cash Flow from Investing Activities $ -729,500
Financial Cash Flow
(+) Long term debts $ 510,000 Short term debts $ 200,000 (-) Treasury Stock $ -26,000 Dividends Paid $ -10,000 Net Cash Flow from Financing Activities $ 674,000
Opening Cash Balance $ 113,000
Net Cash Flow $ -103,510 Closing Cash Balance $ 9,490
3 Main sources and uses of cash
Sources Cash from Sales $ 1,816,200 Cash from Sales of Machines $ 215,500 Long Term Debt $ 510,000 Short Term Debt $ 200,000 4 Recommendations
A Reduce credit time of borrowers from 40 days to 30 days, thereby increasing cash flow, reducing B Reduce inventory of finished goods. Management to decide an optimum level. Unsold products i C Look to source raw material and other supplies on credit. This will help to maintain cash flow at fi Claculations
Machine BV $ 212,500 Machine sold at $ 215,500 Depriciation/year $ 21,250
Production Facility $ 850,000
Land $ 250,000 Building $ 600,000 Depriciation/year $ 85,000 P1 92 $ 425,000 P2 94 $ 141,667
P3 95 $ 141,667 P3 96 $ 141,667
New Mahcines $ 520,000
Depriciation/year $ 52,000
No. of Shares 20,000
Price/Share $ 1.3 Repurchase Shares $ 26,000
LTD $ 510,000 10%
STD $ 200,000
91 Dividend $ 0.02 $ 10,000
92 Dividend 10% Common Stock 500000
Uses Purchase of New Machines $ 520,000 Purchase of New Facility $ 425,000 Raw Material $ 473,150 Labour $ 660,000 S&A Expenses $ 195,750 easing cash flow, reducing A/R and reducing short term borrowing liabilities um level. Unsold products increases opportunity costs and reduces cash flow. p to maintain cash flow at firm's end.
