ACKNOWLEDGEMENT

In performing our Assignment, we had to take the help and

guideline of the one, who deserves our greatest gratitude.
The completion of this assignment gives us much Pleasure.
We would like to show our gratitude to Sir Nauman Nazir,
University of Central Punjab, Faisalabad, for giving us this
assignment the purpose of which was to increase our
knowledge and to do some practical work.
Accounting Cash Flow:
PARTICULARS AMOUNT ($) AMOUNT ($)
Cash, beginning of year 251,000
OPERATING ACTIVITY:
Net Income 742,000
Plus: Depreciation 159,000
: Deferred Taxes 109,000
1,010,000
Add: Increase in A/P 17,000

Decrease in Inventory 14,000

Less: Increase in other CA 9,000
Increase in Accounts Receivable 31,000
Decrease in Other CL 99,000
Net Cash From Operating Activities 902,000

INVESTING ACTIVITY

Sale of Fixed Assets 139,000

Purchase of Fixed Assets (786,000)
Net Cash from Investments (647,000)

FINANCING ACTIVITY
Equity Repurchased (40,000)
Equity Sold 11,000
Debt Raised 118,000
Debt Retired (98,000)
Dividends Paid (212,000)
Increase in Accounts Payable 5,000
Net Cash from Financing (216,000)

Net Increase in Cash 39,000

Cash End of Year 290,000

Financial Cash Flow:

Cash Flow from Assets = Cash Flow Paid To Creditors + Cash Flow Paid To Equity
Investor

Cash Flow from Assets = Operating Cash Flow Net Capital Spending Changes in
Net Working Capital

Following calculations will be made :

Operating Cash Flow:
Operating Cash Flow = EBIT + Depreciation - Tax

= 1332 + 159 - 386

= 1,105

Net Capital Spending :

NCS= Ending Net Fixed Assets Beginning Net Fixed Assets + Depreciation

= 2,280 1,792 + 159

= 747

Changes in Net Working Capital :

Changes in Net Working Capital = Ending NWC Beginning NWC

= (1219-491) - (1154-568)

= 728 - 586

= 142
Cash Flow From Assets
Particulars Amount $
Operating Cash Flow 1105
Less: (Net Capital Spending) (647)
(Changes in NWC ) (142)
Cash Flow From Assets 316

Cash Flow To Creditors

Particulars Amount $
Interest Paid 95
Less: Net New Borrowing (20)

Cash Flow To Creditors 75

Cash Flow to Stockholders

Particulars Amount $
Dividends Paid 212
Less: Equity Raised (1 )
: Surplus Raised (10)
Add: Treasury Stock Raised 40
Cash Flow to Stockholders (241)

Cash Flow to Investors:

= Cash Flow To Creditors + Cash Flow to Stockholders

= 75+ 241

= 316

Cash Flow from Assets = Cash Flow to Investors

Requirement # 1

How would you describe Warf Computers cash flows?

According to Warf Computers Cash Flows:

It is having inflows from operating activities on the other hand outflows from
financing activities.
But overall there is cash inflow in the Firm which shows a good cash generating
ability of Warf Computers.
So, Financial Investors can consider investing in this firm because its cash flows
are positive and there is less chance of bankruptcy.

Requirement # 2

Which cash flow statement more accurately describes the

cash flows at the company?

From Investment Point of View, Accounting Cash flow more accurately describes cash
flows at the company because:

It shows the investors each activity and the cash generation from the activities
separately..
Benefit to Investors is shown through this statement that can attract investors that
me be debt holders or stockholders
All expenses and revenues to the year, investments and financial position is
shown through this statement.
Investors can take decision at a glance by seeing the statement that whether they
should invest or not.
Requirement # 3

In light of your previous answers, comment on Nicks

expansion plans.

Nicks Expansion Plan is favorable because:

Even By Raising amount of Debt, Increasing Equity and Investing in Fixed Assets
it have a positive cash flows according accounting cash flow statement.
It can continue with this plan as it will give him revenues in the long run.