Question

The following is the Statement of Profit and Loss of Z Ltd. for the year ended March 31, 2023:

Particulars	Amount (₹)
I. Revenue from Operations	40,00,000
II. Expenses:
Purchases	22,00,000
Changes in Inventories (Opening Inventory − Closing Inventory) (₹ 8,00,000 − ₹ 9,000,000)	(1,00,000)
Depreciation and Amortization Expenses	80,000
Other Expenses	10,20,000
Total Expenses	32,00,000
III. Profit before Tax (I - II)	8,00,000

Additional Information:

1. Sundry Creditors increased by ₹ 40,000 during the year.
2. Sundry Debtors increased by ₹ 70,000 during the year.
3. Outstanding wages decreased by ₹ 10,000 during the year.
4. Bills Receivable decreased by ₹ 5,000 during the year.
5. Prepaid expenses decreased by ₹ 20,000 during the year. 

Compute net Cash from operations by the indirect method.

Answer 1

Cash from Operating Activities for the year ending 31st March, 2023
Particulars		Amount (₹)
Net Profit before Tax		8,00,000
Add: Depreciation and Amortization		80,000
Operating Profit before Working Capital Changes		8,80,000
Adjustments for Working Capital Changes:
Add:
Decrease in Bills Receivable	5,000
Decrease in Prepaid Expenses	20,000
Increase in Creditors	40,000	65,000
Less:
Increase in Debtors	(70,000)
Decrease in Outstanding Wages	(10,000)	(80,000)
Net Working Capital Adjustment		(15,000)
Net Cash from Operating Activities		7,65,000