Arrange the following in a sequence to determine Cash Flow from Operating Activities in case there is no provision for tax.
(A) Net Cash From Operating Activities
(B) Net Profit before Taxation
(C) Adjustments for working Capital Changes
(D) Adjustment for Non Cash and Non Operating Items
(E) Operating Profit before Working Capital
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is option 3- (B), (D), (E), (C), (A).
(B) Net Profit before Taxation
(D) Adjustment for Non Cash and Non Operating Items
(E) Operating Profit before Working Capital
(C) Adjustments for working Capital Changes
(A) Net Cash From 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 |