Cave Ltd. made a profit of ₹1,50,000 after charging deprecation of ₹30,000 on assets and a transfer to general reserve of ₹30,000. The Goodwill amortised was ₹9,000 and gain on sale of machinery was ₹5,000. Operating profit before working capital changes will be :
Answer & explanation
Correct answer: option 3
The correct answer is option (3) - ₹2,14,000.
Net profit = ₹1,50,000
Add: depreciation of = ₹30,000
Add: transfer to General Reserve = ₹30,000
Add: Goodwill Amortised = ₹9,000
Less: Profit on sale of Asset = ₹5,000
Operating profit before working capital changes = (1,50,000 + 30,000 + 30,000 + 9,000 -5,000)
= 2,14,000