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    Question

    ABC Ltd. reports a net profit after tax of ₹6,00,000

    for FY 2024–25. Depreciation expense is ₹1,20,000. Accounts receivable increased by ₹80,000, inventory decreased by ₹50,000, accounts payable decreased by ₹40,000, and accrued expenses increased by ₹10,000. No extraordinary items exist. Calculate cash flow from operating activities (CFO) using the indirect method.
    A ₹6,80,000 Correct Answer Incorrect Answer
    B ₹6,70,000 Correct Answer Incorrect Answer
    C ₹6,50,000 Correct Answer Incorrect Answer
    D ₹6,60,000 Correct Answer Incorrect Answer
    E ₹7,00,000 Correct Answer Incorrect Answer

    Solution

    CFO = Net profit + Depreciation – Increase in receivables + Decrease in inventory – Decrease in payables + Increase in accrued expenses. = 6,00,000 + 1,20,000 – 80,000 + 50,000 – 40,000 + 10,000 = ₹6,60,000.

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