Statement of cash flows of the Nice Suit Dry Cleaning

Abstract

According to Investopedia “Cash Flow” is cash or cash equivalent moving or out of business. We have a cash flow statement in hand with some of the items missing in it. We will try to find out the value and we will figure out the relationship of those items with other line items. Now let us explore the statement of cash flows of the Nice Suit Dry Cleaning

 

Keywords: cash flow statement

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow Statement

Cash Flows from Operating Activities      
   
Cash received from customers 3,701,327  
Cash paid out to suppliers and employees [_____A_____]  
Interest paid (28,134)  
Taxes paid (42,046)  
  Net cash provided by operating activities 72,074
   
Cash Flows from Investing Activities  
   
Purchase

 

of equipment

(4,272)  
  Net cash used in investing activities [_____B_____]
   
Cash Flows from Financing Activities  
   
New loans 50,000  
Funds received from lines of credit 26,234  
Repayments on loans [_____C_____]  
Repayments on lines of credit (26,234)  
Repayment of note (38,501)  
  Net cash used in financing activities (38,501)
   
Net Increase in Cash [_____D_____]
   
Cash balances, beginning of year [_____E_____]
   
Cash balances, end of year     130,366

 

 

A = Cash paid out to suppliers and employees

Step 1. Net cash provided by operating activities = Cash received from customers + Cash paid out to suppliers and employees + Interest paid + Taxes paid

Step 2. Cash paid out to suppliers and employees = Net cash provided by operating activities – (Cash received from customers + Interest paid + Taxes paid)

Step 3.  A = 72,074 – (3,701,327 + (28,134) + (42,046))

Step 4. A = 72074 – (3701327 – 28134 -42046) = -3,559,073

Cash paid out to suppliers and employees is included in “operating activities” because it is cost of core business and is part to calculate net cash earned by operating activities.

 

B = Net cash used in investing activities = – 4272

B or Net cash used in investing activities because the amount was spent to purchase long term or noncurrent asset that is equipment.

C = Repayments on loans

Step 1. Net cash used in financing activities = New loans + Funds received from lines of credit + Repayments on loans + Repayments on lines of credit + Repayment of note

Step 2. Repayments on loans = Net cash used in financing activities – (New loans + Funds received from lines of credit + Repayments on lines of credit + Repayment of note)

Step 3. C = -38501 – (50000 + 26234 -26234-38501) = 50000

C or “Repayments on loans” is part of “financing activities” because it is noncurrent liability related activity.

 

D = Net Increase in Cash

D = Net cash provided by operating activities + Net cash used in investing activities + Repayments on loans

Step 2. D = 72,074 + (4272) + (38501) = 29301

So this is pretty much the sum of all activities in the Statement of cash flow and the result is net increase in cash.

E = Cash balances, beginning of year

E = Cash balances, end of year – Net Increase in Cash

Step 2. E = 130366 – 29301 =101065

We have cash balances end of year and we have got the net increase in cash by summing up all activities in cash flow statement. Basically when we add “net increase in cash” with “cash balance, beginning of the year” we get “cash balance end of year” (Business Plan Hut, n.d.).

 

 

 

 

 

 

       
Cash received from customers   3,701,327  
Cash paid out to suppliers and employees   (3,559,073)  
Interest paid   (28,134)  
Taxes paid   (42,046)  
  Net cash provided by operating activities   72,074
       
Cash Flows from Investing Activities      
       
Purchase of equipment   (4,272)  
  Net cash used in investing activities   (4,272)
       
Cash Flows from Financing Activities      
       
New loans   50,000  
Funds received from lines of credit   26,234  
Repayments on loans   (50,000)  
Repayments on lines of credit   (26,234)  
Repayment of note   (38,501)  
  Net cash used in financing activities   (38,501)
       
Net Increase in Cash     29,301
       
Cash balances, beginning of year     101,065
       
Cash balances, end of year     130,366

 

 

 

 

 

References

Retrieved on 3/2/2018, retrieved from https://www.investopedia.com/terms/c/cashflow.asp

Retrieved on 3/3/2018, retrieved from http://businessplanhut.com/how-calculate-ending-cash-balance-forecast

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