Question

Z Ltd. made a profit of ₹ 20,00,000 after charging Depreciation of ₹ 1,50,000, writing off preliminary expenses of ₹ 10,000, and loss on sale of assets ₹ 30,000. The other information available to you is as follows:

At the end of the year, Trade Payables showed an increase of ₹ 45,000; Trade Receivables, an increase of ₹ 53,000; Prepaid Expenses decrease of ₹ 2,000; and Outstanding Expenses decrease of ₹ 10,000.

You are required to ascertain cash flow from operating activities.

Answer 1

Cash Flow from Operating Activities
Particulars	Amount (₹)	Amount (₹)
Net Profit		20,00,000
Add: Non-Cash and Non-Operating Expenses:
Depreciation	1,50,000
Preliminary Expenses Written Off	10,000
Loss on Sale of Assets	30,000	1,90,000
Operating Profit before Working Capital Changes		21,90,000
Changes in Working Capital:
Add: Increase in Trade Payables	45,000
Less: Increase in Trade Receivables	53,000
Add: Decrease in Prepaid Expenses	2,000
Less: Decrease in Outstanding Expenses	10,000
Net Working Capital Adjustment	16,000
		21,74,000