Arrange the following activities in correct sequence for Cash Flow Statement.

A. Operating profit before working capital changes
B. Purchase of fixed Assets
C. Depreciation
D. Decrease in Inventories
E. Proceed from long term borrowings

Choose the correct answer from the options given below:

C, A, D, B, E

The correct answer is Option (2) - C, A, D, B, E.

Depreciation is non cash expense so it is added back to calculate the Operating Profit before Working Capital changes.
After it, change in inventories is recorded as it is change in current asset. After it, operating from operating activity comes out.
Purchase of fixed Assets is an investing activity.
Proceed from long term borrowings is a financing activity.

This is the correct sequence of preparing cash flow statement-
(I) Cash flows from operating activities
(II) Cash flows from investing activities
(III) Cash flows from financing activities
Net increase (decrease) in cash and cash equivalents (I+II+I+III)
+ Cash and cash equivalents at the beginning
= Cash and cash equivalents at the end.