Question

Grand Hospitality Ltd., reported Net Profit after Tax of ₹ 6,40,000 for the year ended 31st March, 2019. The relevant extract from Balance Sheet as at 31st March, 2019 is:

Particulars	31st March, 2019 (₹)	31st March, 2018 (₹)
Inventories	1,15,000	1,25,000
Trade Receivables	1,50,000	1,10,000
Prepaid Expenses	20,000	6,000
Trade Payables	1,10,000	80,000
Provision for Tax	20,000	15,000

Depreciation charged on Plant and Machinery ₹ 55,000, insurance claim received ₹ 50,000, gain (profit) on sale of investment ₹ 20,000 appeared in the Statement of Profit and Loss for the year ended 31st March, 2019. Calculate Cash Flow from Operating Activities.

Answer 1

Cash Flow from Operating Activities
	Particulars		Amount (₹)	Amount (₹)
	Profit as per Statement of Profit and Loss			6,40,000
	Add:  Provision for Tax			20,000
	Less: Extraordinary Item
	Insurance Claim			(50,000)
	Profit Before Tax and Extraordinary items			6,10,000
	Items to be Added:
	Depreciation on Plant and Machinery			55,000
				6,65,000
	Items to be Deducted:
	Gain on Sale of Investments			(20,000)
	Operating Profit before Working Capital Adjustments			6,45,000
	Add: Increase in Current Liabilities
		Trade Payables	30,000
	Add:Decrease in Current Assets
		Inventories	10,000	40,000
	Less: Increase in Current Assets			6,85,000
		Trade Receivables	(40,000)
		Prepaid Expenses	(14,000)	(54,000)
	Cash Generated from Operations (before tax and Extraordinary items)			6,31,000
	Less: Tax Paid			(15,000)
	Cash Flow from Operating Activities after Tax			6,16,000
	Add:Extraordinary items
	Insurance Claim			50,000
	Net Cash Flows from Operating Activities			6,66,000