Question
A company reported a Net Profit of ₹5,00,000. During the year, Depreciation was ₹80,000, Gain on Sale of Machinery was ₹20,000, and Trade Receivables increased by ₹30,000. Calculate the Cash Flow from Operating Activities.
Solution
Net Profit: ₹5,00,000 Add: Depreciation (Non-cash): + ₹80,000 Less: Gain on Sale (Non-operating): - ₹20,000 Less: Increase in Trade Receivables (Current Asset increase): - ₹30,000
Total cash from operating activity = 5,00,000+80,000−20,000−30,000 = Rs. 𝟓 , 𝟑𝟎 , 𝟎𝟎𝟎
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