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CMA Intermediate · Financial Management and Business Data Analytics · Fund Flow Statement - Preparation and Analysis

Meera Textiles reports net profit of Rs 4,00,000 after charging depreciation Rs 80,000, loss on sale of machinery Rs 15,000, and after crediting profit on sale of investments Rs 25,000. What is the funds from operations?

Funds from operations is Rs 4,70,000. Start with profit of 4,00,000, add depreciation 80,000 and loss on sale of machinery 15,000, then deduct profit on sale of investments 25,000, since that item is non-operating and the sale proceeds appear separately as a source.

  1. ARs 4,70,000Correct
  2. BRs 4,20,000
  3. CRs 4,95,000
  4. DRs 3,70,000

Explanation

Add non-fund and non-operating debits: 4,00,000 + 80,000 + 15,000 = 4,95,000. Deduct non-operating credit of 25,000 to get 4,70,000. The 4,95,000 figure ignores the profit on sale of investments, which is shown separately as sale proceeds.

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