Operating profit before working capital charges amounted to Rs.85,000. The following further information is given
31.3.2020 (Rs.) 31.3.2019 (Rs.) Cash 36,000 30,000 Trade receivable 18,000 12,000 Provision for tax 9,000 8,000 Trade payables 20,000 16,000 Bank over draft 18,000 -
The Net cash flow from operating activities after tax is.
Operating profit before working capital charges amounted to Rs.85,000. The following further information is given
| 31.3.2020 (Rs.) | 31.3.2019 (Rs.) | |
|---|---|---|
| Cash | 36,000 | 30,000 |
| Trade receivable | 18,000 | 12,000 |
| Provision for tax | 9,000 | 8,000 |
| Trade payables | 20,000 | 16,000 |
| Bank over draft | 18,000 | - |
The Net cash flow from operating activities after tax is.
Solution
✅ Correct Option: 2
Start: Operating profit before WC changes = 85,000.
Less: Increase in Trade receivables (6,000) = 79,000.
Add: Increase in Trade payables (4,000) = 83,000.
Cash generated from operations = 83,000.
Less: Tax paid (opening provision) 8,000 = 75,000.
Cash and bank overdraft are part of cash and cash equivalents, not WC. Net cash flow from operating activities after tax = Rs.75,000.
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