A company’s financial data for the year are as follows: - Opening Working Capital = Rs. 2,00,000 - Closing Working Capital = Rs. 2,60,000 - Net Profit after Tax = Rs. 1,10,000 - Depreciation (non‑cash) = Rs. 30,000 - Sale of machinery for cash = Rs. 1,00,000 (book value Rs. 60,000) - Purchase of new equipment for cash = Rs. 1,20,000 Compute the net funds available to the company after considering the change in working capital and fixed‑asset transactions.

Step-by-step solution

1. 1. Determine the change in working capital: $2,60,000-2,00,000=60,000$ (increase, so cash outflow).
2. 2. Start with net profit after tax: $1,10,000$ (cash inflow).
3. 3. Add depreciation: $30,000$ (non‑cash expense, so add).
4. 4. Add cash received from sale of machinery: $1,00,000$.
5. 5. Compute gain on sale of machinery: $1,00,000-60,000=40,000$; add this gain to cash inflows.
6. 6. Subtract the cash outflow on the increase in working capital: $-60,000$.
7. 7. Subtract the cash outflow for purchasing new equipment: $-1,20,000$.
8. 8. Sum all cash inflows and outflows: $1,10,000+30,000+1,00,000+40,000-60,000-1,20,000=1,00,000$.
9. 9. The result $1,00,000$ is the net funds available after the year.

Concept tested: Working‑capital analysis and cash flow from operations

Published 1 October 2026 · How this solution was prepared and checked