Arrange the following in correct order : (A) Income Tax paid(B) Net p…

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

(B) Net profit before tax and extraordinary items — first: the starting point of operating activities (indirect method).

(E) Operating profit before working capital changes — second: net profit after adding back non-cash and non-operating items.

(A) Income Tax paid — third: deducted after working capital changes to reach net cash from operating activities.

(C) Cash flow from Investing Activity — fourth: section B of the statement.

(D) Cash flow from Financing Activity — fifth: section C of the statement.

Note: In Exhibit 6.4 the book prints the two working-capital lines the wrong way round, and its Less line repeats “decrease in current liabilities” where it should say increase. The correct rule: an increase in current assets and a decrease in current liabilities are deducted; a decrease in current assets and an increase in current liabilities are added. This does not change the order asked here.