Identify the correct sequence to be followed while calculating net ca…

The correct answer is Option (4) → (C), (B), (D), (A).

(C) Calculation of net profit before taxation and extraordinary items: Start by calculating the net profit before taxes and any extraordinary items.

(B) Adjustment for non-operating/non-cash charges: Adjust for non-cash and non-operating items (like depreciation, changes in provisions, etc.) that were included in the profit calculation.

(D) Calculation of operating profit before working capital changes: Adjust the net profit to arrive at the operating profit, excluding the impact of working capital changes.

(A) Calculation of cash generated from operations: Determine the cash generated from the operating activities.

Performa of calculating cash flows from operating activities as per indirect method.

	Particulars	Amount
	Net Profit/Loss before Tax and Extraordinary Items
Add	Deductions already made in Statement of Profit and Loss on account of Non-cash items such as Depreciation, Goodwill to be Written-off.
Add	Deductions already made in Statement of Profit and Loss on Account of Non-operating items such as Interest.
Less	Additions (incomes) made in Statement of Profit and Loss on Account of Non-operating items such as Dividend received, Profit on sale of Fixed Assets.
	Operating Profit before Working Capital changes
Less	in case of increase in current assets (other than cash and cash equivalent) and decrease in current liabilities
Add	in case of decrease in current assets (other than cash and cash equivalent) and increase in current liabilities.
	Cash Flows from Operation Activities before Tax and Extraordinary items
Less	Income Tax Paid
+/–	Effects of Extraordinary Items
	Net Cash from Operating Activities