A company reported profit before tax of Rs. 3,30,000 for the year. Depreciation expense was Rs. 35,000. Trade receivables increased by Rs. 12,000, inventories increased by Rs. 5,000, trade payables decreased by Rs. 3,000. Interest paid was Rs. 6,000 and tax paid was Rs. 22,000. Using the indirect method, compute the cash flow from operating activities.

Step-by-step solution

1. Start with profit before tax: 3,30,000.
2. Add depreciation: +35,000 → 3,65,000.
3. Adjust working capital: - Receivables increase 12,000 → –12,000 → 3,53,000. - Inventories increase 5,000 → –5,000 → 3,48,000. - Payables decrease 3,000 → –3,000 → 3,45,000.
4. Subtract interest paid 6,000 → 3,39,000.
5. Subtract tax paid 22,000 → 3,17,000.
6. The resulting cash flow from operating activities is Rs. 3,17,000.

Concept tested: Operating cash flow calculation

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