Figure 1
Published accounts of Tamari plc for year ended 31 December 1999
Cash Flow Statement 1999 1998
?000?000
Operating profit 501420
Depreciation charges 660 600
(-)Increase/decrease in stocks ?305250
(-)Increase/decrease in debtors ?184220
Increase in trade creditors 420120
Net cashflows from operating activities 1，0921，610
Returns on investment and servicing of finance
Interest paid ?150?50
Taxation paid?130?110
Capital expenditure and financial investment
Purchase of tangible fixed asset?1，620?900
Equity dividends paid?160 ?160
Cash outflow before financing ?968390
Financing
Issue of loan1，000100
Increase in cash32290
Profit and Loss Account extracts19991998
?000?000
Operating profit for 1999 501420
Interest paid15050
Profit before tax351370
Taxation：125115
Profit after tax226255
Ratios and percentages based entirely on the contents of the cash flow statement
Figure 2 sets out the relationship between the various numbers in Figure 1. ?Net cash flow from operating activities? is given an index of 100 and becomes the pivotal figure for each of the other calculations. The presentation of calculations in Figure 2 is analogous to the expression of expenses in the profit and loss account as a percentage of sales.
Figure 2 Cash Flow Statement 19991998
%%
Net cash flows from operating activities100.0100.0
Returns on investment and servicing of finance
Interest paid?13.7?3.1m.owmt.cn
Taxation paid?11.9?6.9
Capital expenditure and financial investment
Purchase of tangible fixed asset?148.4?55.9
Equity dividends paid?14.6 ?9.9
Cash outflow before financing?88.624.2
Financing
Issue of loan91.66.2
Increase in cash3.018.0
The following observations may be made concerning the content of Figure 2， focusing principally on the numbers for 1999.
· Interest， taxation and dividends each absorbs a relatively small proportion of cash generated by Tamari from its business operations ? no more than 14.6% in any one case. In total， just 40.2% of internally generated funds are applied in financing the requirements of government and suppliers of long-term finance.
· There has been a heavy investment in tangible fixed assets with 59.8% of the cash flow from operations (100% ? 40.2%) used for this purpose. However， with the investment in fixed assets represented by an index of 148.4， the directors of Tamari have had to look elsewhere for the bulk of the funding. These financial relationships may be contrasted with the previous year when the entire capital investment was funded from internal sources， and a significant proportion (24.2%) of cash flow from operating activities remained available to increase the cash balance.
· The balance of long-term expenditure was entirely funded by the issue of a loan， leaving a small amount over to increase cash available at the end of 1999 compared with a year earlier
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