Determine cash flow operating activities from the following information.
| Particulars | 31 March 2023 (₹) | 31 March 2022 (₹) |
| Inventory | 80,000 | 50,000 |
| Trade payables | 40,000 | 30,000 |
| Goodwill | 1,00,000 | 80,000 |
| Share capital | 15,00,000 | 10,00,000 |
| Debentures | 5,00,000 | 6,00,000 |
Profit during the year was ₹3,70,000.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → ₹3,50,000
Cash flow from operating activities starts from the profit and adjusts it for changes in working capital. Goodwill (investing), share capital and debentures (financing) do not enter the operating section.
Profit for the year = ₹3,70,000
Less: increase in inventory (80,000 − 50,000) = ₹30,000
Add: increase in trade payables (40,000 − 30,000) = ₹10,000
Cash flow from operating activities = 3,70,000 − 30,000 + 10,000 = ₹3,50,000