Question

Discuss the horizontal analysis in the table below, explaining why Cash and Cash equivalents have been twice in 2018 than 2017 despite cash from Operating Activities falling by almost one third. And what risks for doing that?

Horizontal Analysis of Cash Flows

	Note	2018	2017
Cash flows from operating activities		£m	£m	% change
Cash generated from operations	32	137.5	200.4	(31.4)
Finance income		0.1	0.1	–
Finance costs		(11.1)	(11.2)	(0.9)
Tax received/(paid)		1.3	(16.3)	(108)
Net cash generated from operating activities		127.8	173.0	(26.1)
Cash flows from investing activities
Purchase of property, plant and equipment		(105.3)	(72.6)	45.0
Purchase of intangible assets		(30.7)	(52.2)	(41.2)
Proceeds from the sale of property, plant and equipment		7.1	–	–
Investment in associate		(7.5)	–	–
Net cash used in investing activities		(136.4)	(124.8)	9.3
Cash flows from financing activities
Drawdown/(repayment) of revolving credit facility	22	66.0	(25.0)	(364.0)
Dividends paid	12	(35.6)	(42.0)	(15.2)
Purchase of shares by Debenhams Retail Employment Trust 2004	29	–	(0.8)	(100)
Finance lease payments		(1.6)	(1.6)	–
Debt amendment costs		(0.8)	–	–
Net cash generated from/(used in) financing activities		28.0	(69.4)	(140.3)
Net increase/(decrease) in cash and cash equivalents		19.4	(21.2)	(191.5)
Net cash and cash equivalents at beginning of financial year		19.7	40.8	(51.7)
Foreign exchange (losses)/gains on cash and cash equivalents		(0.2)	0.1	(300)
Net cash and cash equivalents at end of financial year	33	38.9	19.7	97.5

© © 124 / 164 A m o © 100% - 7 9 CUTTINUEU 22 BORROWINGS CONTINED Maturity of borrowings The maturity of the Group's undiscounted borrowings is: 1 September 2018 2 September 2017 Em Em 165.6 116.4 Amounts falling due: In one year or less or on demand In more than one year but not more than two years In more than two years but not more than five years 1.6 197.9 198.4 364.0 315.9 Interest rates The effective interest rates at the balance sheet dates were: 1 September 2018 2 September 2017 Bank overdraft 2.45 1.63 Revolving credit facility 2.96 1.74 Senior notes 5.25 5.25 Lease obligations 2.25 2.25 Borrowing facilities The Group has the following undrawn committed facilities available at 1 September 2018, in respect of which all conditions precedent had been met as at that date: 1 September 2 September 2018 2017 fm Em Expiring in: More than one year but not more than two years (2017: between two and five years) 159.0 225.0 23 FINANCIAL RISK MANAGEMENT a) Financial risks and treasury management The Group conducts its treasury activities within the remit of a treasury policy which outlines approved policies, procedures and authority levels. The board delegates its responsibility for reviewing and approving treasury policy to the Audit Committee. Reports are prepared monthly covering all areas of treasury activity and policy compliance and are reviewed by the Chief Financial Officer The board and Audit Committee receive regular reports covering treasury activities and policy compliance. Group treasury manages the Group's funding requirements and financial risks in line with the agreed treasury policies and procedures The Group's financial inetrimento ether the de l icid i lable

Answer 1

Cash and Cash equivalents have been twice in 2018 than 2017 despite cash from Operating Activities falling by almost one third. The Main Reason for the same is company has drawdown 66M from revolving credit in which company can draw further 159M as all the documents are in place and major amount of the company In this year were invested in procuring purchase of property plant & equipment & intangible assets which are of long term nature. The company has loan liability due  of $165.60 Million which can be repaid from facility of 159M and rest from net proceeds of operating activities but surely company is going to face problem in 2020 as the loan become due to this year also but no major sources are available to repay the same. Either the company has to work for increasing operating Income or Arrangement of long term loan (payable from 2-5 years) / sale of plant & equipments to arrange cash flow.