Revision question on preparation of statement of cash flow.

The following information has been taken from the financial statements for Payne plc (Payne) for the year ended 31 March 2013.  

*Statement of Profit or Loss and Other Comprehensive Income (extracts) for year ended 31 March 2013:€ʼ000

Profit before interest & tax   981
Finance costs   (108)
Profit before tax   873
Income tax expense   (305)
Profit for the year   568
Other comprehensive income    
Revaluation surplus on property, plant and equipment    418
Total comprehensive income    986
  Statements of Financial Position as at 31 March    
  2013 ʼ000 2012 ʼ000
Non-current assets:    
Property, plant and equipment 11,250 10,500
Intangibles    500    452
  11,750 10,952
Current assets:    
Inventories 840 1,125
Trade and other receivables 260 210
Investments 38 18
Cash and cash equivalents        5     30
  1,143 1,383
Total assets 12,893 12,335
Ordinary share capital 6,000 5,250
Share premium account 1,800 1,425
Revaluation surplus 750 356
Retained earnings  2,011 3,369
  10,561 10,400
Non-current liabilities:    
Preference share capital (redeemable)    760   600
Current liabilities:    
Trade and other payables 222 210
Taxation 600 525
Ordinary dividend payable    750   600
  1,572 1,335
Total equity and liabilities 12,893 12,335

Statement of Changes in Equity for the year ended 31 March 2013 (extract)

  Retained Earnings Revaluation Surplus
ʼ000 ʼ000
Balance at 1 April 2012 3,369 356
Dividends declared (1,950)  
Total comprehensive income for the year 568 418
Transfer from revaluation surplus to retained earnings      24   (24)
Balance at 31 March 2013  2,011   750

  * In June 2011, the IASB issued amendments to IAS 1 Presentation of Financial Statements. One of these proposed the adoption of the title Statement of Profit or Loss and Other Comprehensive Income for the performance statement. The title Statement of Comprehensive Income could have been used above. The following additional information is relevant:

(i)       During the year Payne issued both ordinary shares and redeemable preference shares for cash. The latter were issued at par.

(ii)      Investments classified as current assets are held for the short term and are readily convertible into the stated amounts of cash on demand. (iii)     During the year, Payne sold plant and equipment with a carrying amount of €840,500 for €900,000. Total depreciation charges for the year amounted to €1,100,000. Plant costing €50,000 was purchased on credit. The amount is included within trade and other payables.

(iv)     Trade and other payable include accrued interest of €5,000 as at 31 March 2013 (2012: €10,000). (v)      Intangibles relate to development costs capitalised in accordance with IAS 38 Intangible Assets. Costs amounting to €70,000 were capitalised during the year.  


(a)     Prepare a Statement of Cash Flows for Payne for the year to 31 March 2013 in accordance with IAS 7 Statement of Cash Flows.  

(b)     You have been provided with the following additional information in relation to Payneʼs trading performance for the years ended on the stated dates:  

  31/3/2013 31/3/2012
  Revenue €ʼ000
Cost of sales (2,040) (1,400)
Operating expenses (379) (357)

Write a report concisely analyzing the cash flow, profitability and working capital management of Payne Ltd during the year ended 31 March 2013. Your report should be supported by appropriate ratios (a total of 4 marks is available for the calculation of ratios).                                                                                                     

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