For the year ended 31st March 2025, Sons Ltd. made a profit of ₹ 4,00,000 after charging depreciation of ₹ 75,000 on fixed assets and a transfer of ₹…

Calculation of cash flows from operating activities : Particulars (₹) Net Profit before tax (Working Note $\displaystyle 1$) $\displaystyle 5,50,000$ Adjustment for- Add: Depreciation on fixed assets $\displaystyle 75,000$ Add: Goodwill written off $\displaystyle 80,000$ Less: Gain on Sale of Machinery $\displaystyle (5,000)$ Operating Profit before Working Capital Changes $\displaystyle 7,00,000$ Add: Increase in Trade Payables $\displaystyle 30,000$ Less: Increase in Trade Receivables $\displaystyle (40,000)$ Less: Increase in Prepaid expenses $\displaystyle (2,000)$ Less: Decrease in outstanding wages $\displaystyle (20,000)$ Cash inflows from operating activities $\displaystyle 6,68,000$ Working Note $\displaystyle 1$: Calculation of Net Profit before tax: (₹) Net Profit $\displaystyle 4,00,000$ Add : Amount transferred to general reserve $\displaystyle 1,50,000$ Net Profit before tax: $\displaystyle 5,50,000$