Question

From the following information of HM Ltd., you are required to calculate Cash flow from Operating Activities for the year 2024-25.

Particulars	(₹)
Profits for the year 2024-25, after considering the following items:	2,42,000
Tax provided	40,000
Depreciation on Office Equipment	48,000
Profit on Sale of Land	26,000
Interest on Bank Loan	24,000
Interim dividend	36,000

Additional information:

• Balance of Provision for Tax on 31^st March, 2025 was ₹ 45,000, which was increased by ₹ 5,000 as compared to the previous year.
• Trade Receivables were increased by ₹ 11,000 as compared to the previous year.

Answer 1

Cash Flow from Operating Activities of HM Ltd. For the year ended 31st March, 2025
Particulars	Amount (₹)
Profit for the year	2,42,000
Add: Tax provided during the year	40,000
Add: Interim Dividend paid	36,000
Net Profit Before Tax	3,18,000
Add: Depreciation on Office Equipment	48,000
Add: Interest on Bank Loan	24,000
Less: Profit on Sale of Land	(26,000)
Operating Profit before Working Capital changes	3,64,000
Adjustments for Working Capital:
Less: Increase in Trade Receivables	(11,000)
Cash Generated from Operations	3,53,000
Less: Income Tax Paid (Working Note below)	(35,000)
Net Cash from Operating Activities	3,18,000

Working Note:

Calculation of Tax Paid:

Opening Provision for Tax (45,000 − 5, 000) = ₹ 40,000

Add: Tax provided during the year = ₹ 40,000

Less: Closing Provision for Tax = (₹ 45,000)

Tax Paid = ₹ 35,000