Study the information given below carefully and answer the following question.

Radhika an alumni of IIM Bangalore initiated her startup Radhika Ltd. in 2020. The profits of Radhika Ltd in the year 2021-2022 after all appropriations was ₹31,25,000. This profit was arrived after taking into consideration the following items:-

Additional Information:

Cash flow from Operating Activities will be……………………

₹31,20,000

The correct answer is option 2- ₹31,20,000.

Net profit before tax  and Extraordinary items = Net profit after all appropriations + Transfer to general Reserve + Provision for taxation
                                 = 31,25,000 + 4,37,500 + 8,75,000
                                 = 44,37,500

Add : Deductions already made in Statement of Profit and Loss on account of Non-cash items such as Depreciation, Goodwill to be Written-off- 7,80,000
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- 12,50,000

Operating profit before working capital changes = (44,37,500 + 7,80,000 - 12,50,000)
                                                                                 = 39,67,500

Operating Profit before working capital Changes  = 39,67,500
Add: Increase in Current liabilities (Trade Payables) = 1,00,000
Less: Increase in Current assets = (Prepaid Exp 2,50,000 + inventory 2,30,000 + Trade Receivables 30,000)=5,10,000

Cash from Operating Activities before tax = 39,67,500 + 1,00,000 - 5,10,000
                                                                     = ₹35,57,500

Cash flow from Operating Activities  = Cash from operating Activities before tax - Tax
                                                             = 35,57,500 - 4,37,500
                                                             = 31,20,000

Note- Provision for tax is assumed to be paid int he current year at the end.