A company’s financial data for the year are as follows: Opening Working Capital = Rs. 1,30,000 Closing Working Capital = Rs. 1,90,000 Net Profit after Tax = Rs. 1,05,000 Depreciation (non‑cash) = Rs. 45,000 Sale of machinery for cash = Rs. 1,20,000 (book value Rs. 80,000) Purchase of new equipment for cash = Rs. 1,00,000 Compute the net funds available to the company after considering the change in working capital and fixed‑asset transactions.

Step-by-step solution

1. Identify sources of funds: Net profit, depreciation, cash received from sale of machinery.
2. Sources = 1,05,000 (profit) + 45,000 (depreciation) + 1,20,000 (sale proceeds) = Rs. 2,70,000.
3. Identify applications of funds: Purchase of new equipment and increase in working capital.
4. Increase in working capital = Closing WC – Opening WC = 1,90,000 – 1,30,000 = Rs. 60,000.
5. Applications = 1,00,000 (equipment purchase) + 60,000 (WC increase) = Rs. 1,60,000.
6. Net funds = Sources – Applications = 2,70,000 – 1,60,000 = Rs. 1,10,000.
7. Thus the company has net funds of Rs. 1,10,000 available.

Concept tested: Fund flow statement computation

Published 27 September 2026 · How this solution was prepared and checked