Budgets and Cash Flow Statements

Budgeting Notes (Structure d) 1. Total Sales Component Percentage Instructions Total Sales 100% From 60% Enter directly Cash Sales the projected statement into in come the Cash Budget (CB) Credit Sales 40% 1)Complete a debtors schedule collection 2) Total of debtors collection entered into Cash Budget (CB) 2. Total Purchases Component Percentage Instructions Total Purchases 100% Use the cost of sales from Cash Purchases 20% the projected income statement Once calculated, enter Credit Purchases 80% intoCash Budget 1) Complete the creditor payment schedule 2) Total is entered into Cash directly Budget *Requires inverse calculation payment to 3. Fixed Stock Base- Mark-up If the business uses a fixed Component % on Cost Price (CP) 100 Mark-up Selling 20 (MU) 120 Price (SP) Step 1: Identify Step 2: the mark-up Apply the mark-up % 3: Apply the Step 4: Apply the Cost =Cost of Sales % on Sales 80 20 |100 % to the Cost of Sales found in the table or projected income statement Step creditors Calculations base, then Total Purchases stock to identify % for purchases % for discounts on Loan or Fixed Deposit 4. Interest Formula Amountx% x Original Explanation f 1/12 interest is NOT capitalised, it appears the Cash Budget. fit is Projected Interest , it appears in the Income Statement. remains constant unless capitalised increase/decrease is specified. Interest Calculations 3. 1. Interest = OA 2.% = Interest 3.OA = Interest 4. 4. 1. 2. Change x x % x 1/12 12 +0A x 12 % OA= 0A (May) -0A (June) in 5. Depreciation Formula Cost Price % x Explanation x 1/12 Remains constant if no change mentioned. • lf Projected: f IncomeStatement: calculate. use given OE. Depreciation Calculations 5. 1. Depreciation = CP x 7. 2.%= Dep 3. CP = Dep 8. 4. 6. x 12 12 x + % x 1/12 CP +% Increase/Decrease in CP = (NewCP - Old CP) 6. Percentage Change Calculation Formula to Calculate Increaseor Decrease in = (New - Old) Example: (600- 500) 7. Variances and Comment On: Sales Mark-up % Cost ofSales Gross Profit x to actual the difference ldentify to +500 100 =20% Commenting •Comparebudgeted Areas %: + Oldx 100 (e.g, amounts. from last month to this month). is in Advertising mediums(Radio,TV, Rent Income (If Billboard) = same,If decrease = explain reason, If increase = reason) no change Maintenance and Repairs (Negligence may cause long-term damage) 8. Expense Analysis Water& Electricity • Dripping taps • Old equipment • Loadshedding / Faulty and old production Higher pipes draws more power plugs higher cost Telephone Personal calls • Employees should repay the • Use cheaper Salaries and Wages •Comparemanager salaries •Calculate % increase •Comment on fairness • Check difference provider service profitability Big Decisions to to and staff satisfaction - 1s there improvemen? Note •Increase in loan Large loan repayment •Change in fixed other staff or decrease deposits Purchase or sale of fixed assets FORMAT OF THE CASH FLOW STATEMENT NSsets tvesting aclivies The activities of a company can be classified into 3categories Operating activities Financing activities Investing activities Componentsof the Cash Flow Statement Cash Flows from Cash Flows from Cash Flows from Operating Investing Activities Financing Activities Activities LOne Saemet These arethe Cash flows as main income activities of the Company Cash flow as a result of: a result Cash flows involved of: thefunding "Buying and selling of Tangible Assets Changes in selling in the activities The investments: sale and repurchase of shares Fixed Deposits Buying and of and Receiving of inventory paying of loans Receipts from debtors Payments to creditors Paying expenses Curet Preael Sunay; +Shares •Non-Culrent culrent Kaalities Nosets FFxed bNe Loor 6 deposit •Thoome Saleat Dividands iseinov Beuhose Tnsegtecl vcrease pcaics lapayret dcicaE Toeslec malred CONCEPT- GRADE 12 nf\n Cotfoy FORMAT OF THE CASH I FLOW STATEMENT CASH Cash flows EXEMPLAR LIMITED FLOW STATEMENT FOR THE YEAR ENDED Notes from R operating Cash activities generated from operations 1 Interest Tabe paid ol nole aCctLed Curee inect Ihcne + Dividends paid Bal Bal staenant P2ccued E umt Aaue *3 Taxation paid *4 Cash flowsfrom investing activities Purchase of non-current Proceeds from sale of Investments assets non-current assets matured/tepaid Comiart Tnvestnent Sets *5 last y to ihi5c legs Cash flows from financing activities Proceeds from issue 2of of shors repurcaed Repurchase of Payment of long-term Net change in Cash and cash 21e Pice Congotre borrowings issue pa Pricee uee iost year loans cash and cash equivalents 2 Iwerse equivalents 2 Spenc Cash and cash equivalents t •purhaje shares Proceeds from long-term P(Banc 1aes shares Pety at beginning at end casht osS dui of year cash bant of year tSauings ver diatt float CONCEPT-GRADE 12 bok 2 at ouadit (bettocm ) acc ALe yeal NOTES TOTHE CASH I FLOW STATEMENT NOTE 1 Reconciliation between profit operations before taxation and cash generated Profit before taxation alerl ol Adjustments CCC in Calculale) respectof. Interest paid Cit exp io ncen aene DepreciationCaven vecl to Operating profit cal) before changes in Changes in working capital workingcapital )N.P belore from o (Increase) / decrease (rcng st in inventories CorunciO in trade and other Increase/(decrease)in receivables trade and Increase) Cash generated / decrease from operations Incame tav NP 30 after tax aciecd bcheck for StoeG t| 0/. \on calc hcncl) other payables 2. NOTE2 Cash & cash egquivalents Bank Cash float Petty cash NET CHANGE Shter NOTE3 *Lot 3. Dividends paid Amounts in calcuctío h6 financial statements Balance beginning of year Balance end of yearcuurenk Sharelodes eais, inein clhvideds ehccles sfoD Dividends paid nam shalenit NOTE 4 4. Taxation paid Amounts in financial Balance on last Balance on last Taxation paid day day statements of previous year of current year NOTE 5 5. Tangible assets purchased Land and buildings Equipment Vehicles CONCEPT- GRADE 12 Adolitics Disposcis Deprecatic CNeecased) CRccoeos Trade e( T0dke CN) recewalds DelbkcG Nd tiade h -Rolsion debtol5 ExCLDE t debs. bad - Ne none hcued SPRS INCOME (aco prepad dcblois. epense *enent TAX Conpae las 3 dho( Trccle rade dlbes CN) Acruec expense aid fund A meclicda crecitos + pensiam t deferec t Cund io income QTF tobsone esotoD INOF TAY SHAREOLDERS fOR *ExcuDE SAKS S DiviDcDS Loan. Ce paymnents t interest Bal eEy Ralana Seet = Co8 oooxi2) 702 bal o00 aend eopouymerS for CGhct n tei fin loa) y C