Cash Flow from Operating Activities
Net profit after tax
Depreciation
Increase in account receivable
Increase in inventory
Increase in account payable
Increase in accruals
Cash provided by operating activities
Cash Flow from Investing Activities
Income from gross fixed asset
Changes in equity in other firms
Cash provided by investing activities
22,819
0
22,819
Cash Flow from Financing Activities
Decrease in long-term debts
Changes in stockholders' equity
Dividends paid
Cash provided by financing activities
-11,000
0
0
(11,000)
Net increase in cash and market securities (23,370)
Operating Cash Flow
OCF
=
[EBIT x (1 - T)] + Depreciation
=
[77,100 x (1 - 0.25)]+ 40,000
=
97,825
*Malaysia's Corporate Tax rate on 2013 is 25%
During 2013, Cekap Auto Parts generated RM97,825 of cash flow from producing and selling
its output. Therefore Cekap Auto Parts' operations are generating positive cash flows.
Free Cash Flow
FCF
=
OCF - Net fixed asset investment(NFAI) Net current asset investment(NCAI)
NFAI
=
=
=
Change in net fixed assets + Depreciation
(385,477 - 327,658) + 40,000
97,819
NCAI
=
=
=
=
Change in current assets - Change in (accounts payable + accruals)
(739,530 - 663,600) - [(16,795 - 15,995) + (11,602 - 9,301)]
75,930 - (800 + 2,301)
72,829
FCF
=
=
97,825 - 97,819 - 72,829
-72,823
During 2013, Cekap Auto Parts generated -72,823 of free cash flow,which means it does not
have enough cash to pay its investors-creditors(payment of interest) and owners(payment
of dividends). Thus, the firm generated inadequate cash flow to cover all of its operating
costs and investments and do not have free cash flow available to pay investors.