Interviewer view · keep this screen to yourself

Building the cash flow statement and checking the links

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

Harbour Furniture made the profit shown in the P&L above. During the year it also bought new machines for MYR 25 million, repaid MYR 10 million of its bank loan and paid MYR 10 million of dividends. Build its cash flow statement and check that all three statements tie together.

The prompt refers to Exhibit 1. After reading it, say: "Open Exhibit 1 now."

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Change in cash = operating cash flow + investing cash flow + financing cash flow (this comes from the question: explain the move in cash)
- Operating: net profit, plus depreciation, minus the cash tied up in working capital
- Investing: the MYR 25 million of machines
- Financing: the loan repayment and the dividends
- Checks: closing cash, equipment and equity must match the balance sheet

Exhibit 1

The prompt uses this exhibit, so the candidate opens it right after you read the prompt ("Show exhibit 1" on their screen).

Harbour Furniture (fictional): P&L for the year(MYR millions)

Harbour Furniture (fictional): P&L for the year
Line	Amount
Revenue	300
Cost of goods sold	-180
Gross profit	120
Operating expenses	-60
EBITDA	60
Depreciation	-15
EBIT (operating profit)	45
Interest on the bank loan	-5
Profit before tax	40
Tax at 25 percent	-10
Net profit	30

So-what

The company earned MYR 30 million of profit. The next two exhibits show where that profit went.

4. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Net profit
What a strong candidate does: Revenue 300 minus COGS 180, operating expenses 60, depreciation 15 and interest 5 gives 40 before tax. Keep 75 percent after tax.
Net profit (MYR millions): (300 - 180 - 60 - 15 - 5) × 0.75 = 30
Step 2: Working capital
What a strong candidate does: Receivables rose 10 and inventory rose 10, which ties up 20 of cash. Payables rose 5, which frees 5.
Cash effect of working capital (MYR millions): -(40 - 30) - (50 - 40) + (30 - 25) = -15
Step 3: Operating cash flow
What a strong candidate does: Net profit 30, plus depreciation 15, minus 15 for working capital.
Operating cash flow (MYR millions): 30 + 15 - 15 = 30
Step 4: Free cash flow
What a strong candidate does: Operating cash flow minus the 25 spent on machines.
Free cash flow (MYR millions): 30 - 25 = 5
Step 5: Financing cash flow
What a strong candidate does: The loan repayment of 10 and dividends of 10 both send cash out.
Financing cash flow (MYR millions): -10 - 10 = -20
Step 6: Change in cash and closing cash
What a strong candidate does: Operating 30, investing minus 25, financing minus 20 gives minus 15. Opening cash of 20 minus 15 leaves 5, the number on the closing balance sheet.
Closing cash (MYR millions): 20 + 30 - 25 - 20 = 5
Step 7: Equipment check
What a strong candidate does: Opening equipment 110, plus new machines 25, minus depreciation 15.
Closing equipment (MYR millions): 110 + 25 - 15 = 120
Step 8: Equity check
What a strong candidate does: Opening equity 115, plus net profit 30, minus dividends 10.
Closing equity (MYR millions): 115 + 30 - 10 = 135
Step 9: The balance sheet balances
What a strong candidate does: Assets: 5 plus 40 plus 50 plus 120. Liabilities and equity: 30 plus 50 plus 135. Both come to 215.
Total assets minus total liabilities and equity (MYR millions): (5 + 40 + 50 + 120) - (30 + 50 + 135) = 0

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

The three statements tie together, and they show a profitable company whose cash fell from MYR 20 million to MYR 5 million. The reasons are that 15 million went into working capital, 25 million into new machines, and 20 million to the bank and the owners, against only 30 million of operating cash. This means free cash flow was just MYR 5 million, not enough to fund both the loan repayment and the dividend. The risk is that 5 million of cash is thin against 30 million owed to suppliers. As a next step, check whether the new machines will lift sales, and whether the dividend should wait until stock and receivables come down.

Risks a strong answer names: Cash of MYR 5 million leaves little room if a large customer pays late; Rising inventory may mean furniture that is not selling.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.