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Digi's Cash Flow Statement Essay

1170 words - 5 pages

Identify the format of Statement of Cash Flow use by the business (Direct or Indirect) for three consecutive years; the major cash inflow and cash outflow for the three different activities.
Cash flow statements for the year ended 31 December 2009 | | | |
| | | | |
| | Group |
| | 2009 | 2008 | 2007 |
| Note | RM'000 | RM'000 | RM'000 |
Cash flows from operating activities | | | | |
Profit before tax | | 1,366,455 | 1,546,896 | 1,445,314 |
Adjustment for: | | | | |
Amortisation expenses of intangible assets | 12 | 138,615 | 62,823 | 82,440 |
Amortisation expenses of prepaid lease payments | | 223 | 223 | 217 |
Allowance for doubtful debts | | ...view middle of the document...

This Digi Company’s accounting systems are design for accrual accounting, and it makes it easy for us to calculate the cash flow statement by using this short cut method. Furthermore, it is much easier to understand, provides better information for decisions and the method required by certain accounting standards. Through the process of learning or analyzing this direct method, we can know how to determine the cash effects of the business transactions.

There are three types of different activities in any cash flow statements and the first activity will be operating activity, which reports on the cash impact of the revenues and expenses. These are call inflows to the company. Above the Amortisation expenses of intangible assets have a large amount of difference during the year 2009 and 2008. The amount of difference is RM75,792 which is more than 50% difference. The year 2009 and year 2008 have a massive change in Allowance for doubtful debts with the amount of RM70,452 and RM33,277. In the other hand, the Finance cost for year 2009 and 2008 have the difference of RM28,229. For year 2009, the company have a gain in disposal of property, plant and equipment whereas the year 2008 and 2007 have a loss in disposal of property, plant and equipment. The interest income has been inproving for the past 3 years however the company is still experiencing a loss. As you can see the Property, plant and equipment written-off is drasticly decreasing from year 2007 to 2009. The Operating before working capital changes overall from year 2007 to 2009 experienced a profit of RM31,110. The inventories have improved from RM-470 to RM-8,394, finally to RM3,992. Same situation goes to receivables, an improvement of RM32,883 compare the year 2008 and 2009. However, payable seem to have a decrease in value, from RM-115,805 to...

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