Question

XYZ Ltd. has a revenue of Rs. 8,00,000 and it has provided for depreciation at 10% SLM method. It has cash expenses of R.2,00,000. The taxes are 50% p.a. show the net earning on accounting approach basis and cash flow basis. Ple

Answer 1

Answer:

A. Cash flow related to  assets:- Operating cash flow 90 - Net capital spending (105) - Decrease in net working capital 35 - Cash flow from assets is 20 .B. Cash flow to creditors :- Interest payment  25 - Repayment of long term debt (15) - Cash flow to creditors 10 .C. Cash flow to shareholders :- Dividends payment  10 - Net new equity raised 0 - Cash flow to shareholders 10. Thus we weget  (A) = (B) + ( C) i.e., Cash flow from assets = Cash flow to creditors + Cash flow to shareholders

Answer 2

Explanation:

A. Cash flow related to  assets:- Operating cash flow 90 - Net capital spending (105) - Decrease in net working capital 35 - Cash flow from assets is 20 .

B. Cash flow to creditors :- Interest payment  25 - Repayment of long term debt (15) - Cash flow to creditors 10 .

C. Cash flow to shareholders :- Dividends payment  10 - Net new equity raised 0 - Cash flow to shareholders 10. Thus we weget  (A) = (B) + ( C) i.e., Cash flow from assets = Cash flow to creditors + Cash flow to shareholders

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