Calculate the amount of cash generated from operations from the following information :
Particulars (Rs.) Profit before change in working capital 2,00,000 Depreciation on plant and Machinery 20,000 Gain on sale of Building 10,000 Increase in trade Paybles 4,500 Increase in trade Receivables 3,500 Interest paid 2,225 Decrease in Inventories 3,750 Redemption of 10% Debentures 80,000
Calculate the amount of cash generated from operations from the following information :
| Particulars | (Rs.) |
|---|---|
| Profit before change in working capital | 2,00,000 |
| Depreciation on plant and Machinery | 20,000 |
| Gain on sale of Building | 10,000 |
| Increase in trade Paybles | 4,500 |
| Increase in trade Receivables | 3,500 |
| Interest paid | 2,225 |
| Decrease in Inventories | 3,750 |
| Redemption of 10% Debentures | 80,000 |
Solution
✅ Correct Option: 3
Treating 2,00,000 as Net Profit before Tax: Operating Profit before WC changes = 2,00,000 + 20,000 (dep) - 10,000 (gain) + 2,225 (interest added back) = 2,12,225. Cash Generated from Operations = 2,12,225 + 4,500 - 3,500 + 3,750 = 2,16,975.
Note: The NTA label 'Profit before change in working capital' technically means operating profit already adjusted; however the separate listing of depreciation, gain and interest indicates they must be added back, so 2,00,000 is treated as net profit.
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