Page 365 - Microsoft Word - 00 IWB ACCA F7.docx

Answers

Example 1 cont.

Solution

Cash generated from operations is calculated as follows:

20X4
$

Profit before tax 6,900
Finance costs 1,300

Investment income (400)
Depreciation 1,100

Profit on disposal (600)

Increase in inventory (1,200 – 1,150) (50)
Decrease in receivables (1,820 – 1,760) 60

Increase in payables (1,380 – 1,200) 180
———
Cash generated from operations 8,490

———

359