Accounting Business Reporting for Decision Making

CHAPTER 7 Statement of cash flows 279

7.2 Format of the statement of cash flows

LEARNING OBJECTIVE 7.2 Outline the format and the classification of cash flows in the statement of
cash flows.

For the purposes of the preparation and interpretation of the statement of cash flows, cash refers to cash and

cash equivalents. The definition of cash includes cash on hand and demand deposits (such as bank deposits).

Cash equivalents are highly liquid investments and short-term borrowings that are subject to an insignificant

risk of change in value. Examples of these include investments with three months or less to maturity and bank

overdraft facilities repayable on demand. The movement of cash and cash equivalents resulting from trans-

actions with external parties that fall into the definition of ‘cash’ are included in the statement of cash flows.

Like the statement of profit or loss and the balance sheet, the classification, presentation and format of

the statement of cash flows are governed by accounting standards. As outlined above, the statement of cash

flows reports the cash on hand at the start of the reporting period; the cash inflows, outflows and net cash

flow for the reporting period; and the cash balance at the end of the reporting period. The statement of cash

flows is classified into three main sections: operating activities, investing activities and financing activities.

The statement of cash flows for JB Hi-Fi Ltd in figure 7.2 shows the types of activities classified as

operating, investing and financing. Figure 7.2 also presents note 40 from the JB Hi-Fi Ltd 2015 finan-

cial statements, which shows the reconciliation of the cash flow from operating activities with the profit.

Let’s discuss each of these sections in turn.

JB Hi-Fi Ltd

Statement of cash flows for the financial year ended 30 June 2015

Consolidated

Note

2015

$’000

2014

$’000

Cash flows from operating activities

Receipts from customers

Payments to suppliers and employees

Interest and bill discounts received

Interest and other finance costs paid

Income taxes paid

4 012 130

(3 767 211

552

(5 689

(59 886

)

)

)

3 832 979

(3 723 982

402

(7 496

(60 577

)

)

)

Net cash inflow from operating activities 32 179 896 41 326

Cash flows from investing activities

Acquisition of non-controlling interests

Payments for plant and equipment

Proceeds from sale of plant and equipment

12 (2 400

(42 466

496

)

)

(3 000

(35 914

674

)

)

Net cash (outflow) from investing activities (44 370) (38 240)

Cash flows from financing activities

Proceeds from issues of equity securities

Proceeds/(repayment) of borrowings

Payments for debt issue costs

Payments for shares bought back

Share issue and buy-back costs

Dividends paid to members of the parent entity

21

21

24

3 125

(40 113

(484

(4 970

(24

(87 174

)

)

)

)

)

21 523

54 063

(64

(25 830

(118

(77 183

)

)

)

)

Net cash (outflow) from financing activities (129 640) (27 609)

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the financial year

Effects of exchange rate changes on cash and cash equivalents

5 886

43 445

(200 )

(24 523

67 368

600

)

Cash and cash equivalents at end of year 49 131 43 445

FIG U R E 7. 2 JB Hi-Fi Ltd statement of cash flows and reconciliation net cash inflow (outflow) from operating

activities to profit (loss) (continued)