A company reported profit before tax of Rs. 3,00,000 for the year. Depreciation expense was Rs. 50,000. Trade receivables increased by Rs. 20,000, inventories increased by Rs. 10,000, and trade payables decreased by Rs. 5,000. Interest paid was Rs. 8,000 and tax paid was Rs. 28,000. Using the indirect method, calculate the cash flow from operating activities.

Step-by-step solution

1. Start with profit before tax: 3,00,000.
2. Add non‑cash expense: +50,000 depreciation = 3,50,000.
3. Adjust for working‑capital changes:
4. -20,000 for receivables increase → 3,30,000.
5. -10,000 for inventories increase → 3,20,000.
6. -5,000 for payables decrease → 3,15,000.
7. Subtract cash outflows for financing costs:
8. -8,000 interest → 3,07,000.
9. -28,000 tax → 2,79,000.
10. The net result is Rs. 2,79,000.

Concept tested: Operating activities – indirect method

Published 4 October 2026 · How this solution was prepared and checked