CMA Intermediate · Corporate Accounting and Auditing · Cash Flow Statement
Operating profit before working capital changes of Bharat Metals Ltd is ₹8,00,000. During the year, trade receivables increased by ₹90,000, inventories decreased by ₹60,000 and trade payables increased by ₹40,000. Income tax paid was ₹1,10,000. What is the net cash from operating activities?
Net cash from operating activities is ₹7,00,000. Working capital changes net to +₹10,000 (−90,000 receivables, +60,000 inventory, +40,000 payables), giving cash generated of ₹8,10,000 from operations. Deducting income tax paid of ₹1,10,000 leaves ₹7,00,000.
- A₹6,80,000Correct
- B₹7,00,000
- C₹7,20,000
- D₹6,60,000
Explanation
Working capital effect: −90,000 (receivables up) + 60,000 (inventory down) + 40,000 (payables up) = +10,000. Cash generated = 8,10,000. Less tax paid 1,10,000 = 7,00,000. Check: 8,00,000 + 10,000 − 1,10,000 = 7,00,000, so the correct answer is ₹7,00,000.
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