Calculate Operating Profit before working capital changes from the following data:-
i. Net profit before tax and extraordinary items- 20,000
ii. Depreciation - 3,000
iii. Gain on sale of machinery - 2,000
iv. Goodwill amortised- 4,000
v. Income tax paid - 3,000
Answer & explanation
Correct answer: option 3
Net Profit before tax and extra ordinary items -20,000
Add : Dep - 3,000
Add: Goodwill amortised- 4,000
Less : Gain on sale of machinery- 2,000
So, Operating Profit before working capital changes = 20000 + 3000 + 4000 -2000
= 25,000