CFS is a vital report that illustrates the money inflow and outflow of a business, dividing between operating, investing and financing activities to project the current liquidity of the company. Therefore, it provides users with an overall picture of the business’s cash management (Robinson et al. 2012). CFS is based upon the cash basis of accounting (receipts/transfers of cash and cash equivalents).
In operating activities, BC’s net cash inflow increased by $37. 4 million from $100. 3 to $137. 7 million in 2020 particularly due to the improvement in the working capital and net profit after tax (pg. 31).
On a positive note, investing activities recorded a reduction of outflow of $52. 6 million, mainly from the new plant at Koroit and the new ERP system (pg. 31), compared to the outflow of $322. 9 million in 2019 (pg. 43). This change is mainly caused by fewer outflows on non-current assets.
With financing activities, due to borrowings and the issue of shares reduction, there is a rapid drop in the net cash for this section in 2020 at -$91. 0 million. As a result, the total cash and cash equivalents section witnessed a drop from $28. 8 million to $22. 9 million in 2020 (pg. 43). However, a portion of this decrease was spent in upgrading the new plant and system which will increase efficiency in the future, hence BC can still be attractive to investors.
CFS is a vital report that illustrates the money inflow and
outflow
of a business, dividing between operating, investing and financing
activities
to project the
current
liquidity of the
company
.
Therefore
, it provides users with an
overall
picture of the business’s
cash
management (Robinson et al. 2012). CFS
is based
upon the
cash
basis of accounting (receipts/transfers of
cash
and
cash
equivalents).
In operating
activities
, BC’s net
cash
inflow increased by $37. 4
million
from $100. 3 to $137. 7
million
in 2020
particularly
due to the improvement in the working capital and net profit after tax (pg. 31).
On a
positive
note, investing
activities
recorded a reduction of
outflow
of $52. 6
million
,
mainly
from the new plant at
Koroit
and the new ERP system (pg. 31), compared to the
outflow
of $322. 9
million
in 2019 (pg. 43). This
change
is
mainly
caused by fewer
outflows
on non-
current
assets.
With financing
activities
, due to borrowings and the issue of shares reduction, there is a rapid drop in the net
cash
for this section in 2020 at -$91. 0
million
.
As a result
, the total
cash
and
cash
equivalents section witnessed a drop from $28. 8
million
to $22. 9
million
in 2020 (pg. 43).
However
, a portion of this decrease
was spent
in upgrading the new plant and system which will increase efficiency in the future,
hence
BC can
still
be attractive to investors.