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

Sharma Traders had current assets of Rs 3,80,000 and current liabilities of Rs 1,90,000 on 31 March 2025. On 31 March 2026, current assets were Rs 4,70,000 and current liabilities were Rs 2,30,000. What was the change in working capital during the year?

Working capital increased by Rs 50,000. Opening working capital was Rs 1,90,000 and closing was Rs 2,40,000, so the net rise is Rs 50,000. Counting only the Rs 90,000 increase in current assets would ignore the Rs 40,000 rise in current liabilities.

  1. AIncrease of Rs 50,000Correct
  2. BDecrease of Rs 50,000
  3. CIncrease of Rs 90,000
  4. DIncrease of Rs 1,30,000

Explanation

Opening working capital = 3,80,000 - 1,90,000 = 1,90,000. Closing = 4,70,000 - 2,30,000 = 2,40,000. Change = 50,000 increase. Rs 90,000 ignores the rise in liabilities, which is the key distractor.

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