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Chapter 20

Example 17.4

Extracts to be included within cash generated from operations (in $000s)

Decrease in inventory 375
Decrease in receivables 165
Increase in payables 840

Workings

Inventory
B/f 600

Consolidated on acquisition of 150 Disposal of sub 75
new sub
Decrease (β) 375

C/f 300

–––– ––––
750 750
–––– ––––

Alternative working (no T account)

$000

Opening inventory 600
Acquisition of sub 150

Disposal of sub (75)
Decrease in inventory (β) (375)

–––––
Closing inventory 300

–––––
A decrease in inventory will have a positive impact on cash during the period.
This is shown as a positive figure when calculating cash generated from
operations.

Workings continued overleaf

432