Arrange the following in correct sequence for cash flow statement as per schedule III of companies Act, 2013.

A.Profit before Tax and Extraordinary items.

B. Cash from (used in ) Operating Activities

C. Profit after Tax and Extraordinary Items

D. Operating profit before working capital changes

E. Cash from Operating Activities before Tax paid

C, A, D, E, B

The correct answer is option 2- C, A, D, E, B.

C. Profit after Tax and Extraordinary Items: The cash flow statement starts with the profit after taxes and extraordinary items, providing a comprehensive view of the company's financial performance. This profit comes from the statement of profit and loss which is after tax payment.

A. Profit before Tax and Extraordinary items: This represents the profit earned by the company before accounting for taxes and any extraordinary items. Tax is added again to know the cash flow from various activities.

D. Operating profit before working capital changes: This figure comes out by adding and deducting the various non operating items and non cash items in the net profit before tax and extraordinary items. It represents the profit generated from the company's core operations before accounting for changes in working capital.

E. Cash from Operating Activities before Tax paid: After calculating the operating profit before working capital changes the adjust for increase or decrease in current assets and current liabilities made to know the cash flow from operating activity before tax.

B. Cash from (used in) Operating Activities: After taxes are deducted, this section accounts for the cash flow generated from operating activities, providing a clearer picture of operational performance.

NOTE- While working out the cash flow from operating activities, the starting point is the ‘Net profit before tax and extraordinary items’ and not the ‘Net profit as per Statement of Profit and Loss’. Income tax paid is deducted as the last item to arrive at the net cash flow from operating activities.