CASH FLOW STATEMENT

It is a statement regarding all cash inflows a company receives from both its
ongoing operations and external investment sources, as well as all cash
outflows that pay for business activities and investments during a given quarter.
Because public companies tend to use accrual accounting, the income
statements they release each quarter may not necessarily reflect changes in
their cash positions. For example, if a company lands a major contract, this
contract would be recognized as revenue (and therefore income), but the
company may not yet actually receive the cash from the contract until a later
date. While the company may be earning a profit in the eyes of accountants
(and paying income taxes on it), the company may, during the quarter, actually
end up with less cash than when it started the quarter. Even profitable
companies can fail to adequately manage their cash flow, which is why the cash
flow statement is important.

The cash flow statement will reveal the following:
1. How the company obtains and spends cash
2. Why there may be differences between net income and cash flows
3. If the company generates enough cash from operation to sustain the
business
4. If the company generates enough cash to pay off existing debts as they
mature
5. If the company has enough cash to take advantage of new investment
opportunities
Segregation of Cash Flows
The statement of cash flows is segregated into three sections:
1. Operating activities
2. Investing activities
3. Financing activities

1. Cash Flow from Operating Activities (CFO)
CFO is cash flow that arises from normal operations such as revenues and cash
operating expenses net of taxes.

This includes:
Cash inflow (+)
1. Revenue from sale of goods and services
2. Interest (from debt instruments of other entities)
3. Dividends (from equities of other entities)
Cash outflow (-)
1. Payments to suppliers
2. Payments to employees
3. Payments to government
4. Payments to lenders
5. Payments for other expenses
2. Cash Flow from Investing Activities (CFI)
CFI is cash flow that arises from investment activities such as the acquisition or
disposition of current and fixed assets.

This includes:
Cash inflow (+)
1. Sale of property, plant and equipment
2. Sale of debt or equity securities (other entities)
3. Collection of principal on loans to other entities
Cash outflow (-)
1. Purchase of property, plant and equipment
2. Purchase of debt or equity securities (other entities)
3. Lending to other entities


3.Cash flow from financing activities (CFF)
CFF is cash flow that arises from raising (or decreasing) cash through the
issuance (or retraction) of additional shares, short-term or long-term debt for
the company's operations. This includes:


Cash inflow (+)
1. Sale of equity securities
2. Issuance of debt securities
Cash outflow (-)
1. Dividends to shareholders
2. Redemption of long-term debt
3. Redemption of capital stock

Reporting Noncash Investing and Financing Transactions
Information for the preparation of the statement of cash flows is derived from
three sources:
1. Comparative balance sheets
2. Current income statements
3. Conversion of debt to equity
4. Conversion of preferred equity to common equity
5. Acquisition of assets through capital leases
6. Acquisition of long-term assets by issuing notes payable
7. Acquisition of non-cash assets (patents, licenses) in exchange for shares
or debt securities

--------------------Cash Flow Analysis of Ranbaxy Laboratories---------------
Cash flow
Ranbaxy Laboratories

Cash Flow ------------------- in Rs. Cr. -------------------
Mar '14 Dec '12 Dec '11 Dec '10 Dec '09

15 mths 12 mths 12 mths 12 mths 12 mths

Net Profit Before Tax -848.43 -164.28 -3048.67 1565.25 1061.92

Net Cash From Operating Activities -1217.10 641.24 128.38 1168.89 -665.43

Net Cash (used in)/from
Investing Activities
922.04 -1670.89 1765.14 -2067.80 86.12

Net Cash (used in)/from Financing Activities 717.28 314.55 -1275.14 991.48 -214.14

Net (decrease)/increase In Cash and Cash
Equivalents
421.36 -714.62 619.36 92.57 -793.46

Opening Cash & Cash Equivalents 66.57 781.19 161.83 69.26 862.39

Closing Cash & Cash Equivalents 487.93 66.57 781.19 161.83 68.93


Analysis:
Year-2009:
Net Profit before Tax: Company had profit
A positive CFI and negative CFO,CFF reflects that companys long term assets
are sold off to offset negative CFO and redeem loan debt. This reflects poor
state of company and needs improvement.

Year-2010:
Net Profit before Tax: Company had profit
Positive cash flow is generated from operations but not enough to fund huge
investments and hence cash is also being raised from financial activities as well.

Year-2011:
Net profit before Tax: Company went into losses
The company generated very small positive cash flow from operational
activities. But large positive CFI shows that it sold off its long term assets or
investments to maybe settle debts or buy back shares.

Year-2012:
Net profit before Tax: Company went into losses
Here positive CFO and CFF with negative CFI shows that company is using the
cash from operational as well as financing activities to fund the investments. It
is back on growth path.

Year-2014:
Net profit before Tax: Company went into losses
Negative cash flow from operation and positive CFI,CFF is a bad situation as it
shows that to continue operational activities, the company has sell off its
investments or long term assets and also obtain loan or issue shares.




---------------------- Cash Flow Analysis of Cipla-----------------------------
Cash flow
(Rs crore)

Mar ' 14 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10
Profit before tax 1,818.34 2,011.86 1,421.46 1,151.39 1,324.99
Net cashflow-operating activity 1,812.48 1,381.34 1,645.09 987.34 1,041.68
Net cash used in investing activity -1,467.21 -2,064.16 -1,046.78 -1,136.26 -562.23
Netcash used in fin. Activity -404.29 732.83 -627.23 172.06 -471.61
Net inc/dec in cash and equivlnt -59.03 50.01 -28.92 23.14 7.84

Mar ' 14 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10
Cash and equivalnt begin of year 105.07 55.06 83.98 60.84 53.00
Cash and equivalnt end of year 46.04 105.07 55.06 83.98 60.84
Analysis--------------------------------------------------
Year-2010:
Net profit before Tax: Company is in profits
High positive CFO and negative CFO,CFI indicates that company is using the
cash surplus from operating activities to finance its investments and also pay off
debts or dividend. It is the sign of a healthy company.

Year-2011:
Net profit before Tax: Company is in profits
High positive value of CFO and positive CFF, and negative for CFI shows that
company is using the surplus from operational activity and financing activities is
being used for investment activity.

Year-2012:
Net profit before Tax: Company is in profits
High positive value of CFO and negative CFI,CFF shows that company is using
the surplus from operational activities to fund investments and settle debts or
payoff dividends.

Year-2013:
Net profit before Tax: Company is in profits
High positive value of CFO,CFF and negative CFI. It shows that investment
activities are financed by cash surplus from operational and financing activities.

Year-2014:
Net profit before Tax: Company is in profits
High positive value of CFO and negative CFF,CFI shows that company is using
the surplus from operational activity to finance investments and also pay off
debts or dividend. It is the sign of a healthy company








-------------- Cash Flow Analysis Dr. Reddy's Laboratories Ltd. ------------
Cash flow
(Rs crore)

Mar ' 14 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10
Profit before tax 2,454.40 1,753.20 1,259.20 1,051.90 1,084.80
Net cashflow-operating activity 905.50 288.80 1,403.00 246.30 1,253.20
Net cash used in investing activity -880.80 -518.90 -423.50 -613.00 -1,111.10
Netcash used in fin. activity 28.20 151.80 -194.90 61.00 -152.20
Net inc/dec in cash and equivlnt 59.50 -83.90 784.60 -305.70 -10.10
Cash and equivalnt begin of year 56.10 140.00 64.40 371.90 378.10
Cash and equivalnt end of year 115.60 56.10 849.00 66.20 368.00



Analysis:
Year-2010:
Net profit before Tax: Company is in profits
High positive value of CFO and negative CFF,CFI shows that company is using
the surplus from operational activity to finance its investments and also pay off
debts or dividend. It is the sign of a healthy company


Year-2011:
Net profit before Tax: Company is in profits
Positive cash flow is generated from operations but not enough to fund huge
investments and hence cash is also being raised from financial activities as well.


Year-2012:
Net profit before Tax: Company is in profits
High positive value of CFO and negative CFF,CFI shows that company is using
the surplus from operational activity to finance its investments and also pay off
debts or dividend. It is the sign of a healthy company

Year-2013:
Net profit before Tax: Company is in profits
Positive cash flow is generated from operations but not enough to fund huge
investments and hence cash is also being raised from financial activities as well


Year-2014:

Net profit before Tax: Company is in profits
Positive cash flow is generated from operations is enough to fund huge
investments and hence cash is also being raised from financial activities.





Year 2014 Ranbaxy Cipla Dr. Reddys
CFO(Operating)
-1,217.10 1,812.48 905.50
CFI(Investment)
922.04 -1,467.21 -880.80
CFF(Financials)
717.28 -404.29 28.20
Analysis
Very Poor state of affairs:
Investments and long term
assets are sold off to finance the
operational deficit. Also
additional loan and equity is
raised to finance the same.
Very good Condition- It is able to
finance its investments from
cash surplus of Operational
activities and also is able to
payoff debts and dividends
Good Condition: Investments
activities are financed by cash from
operational activities and some more
capital is raised from debt or equity