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Question

Accountancy Question on Cash Flow Analysis

Identify the correct sequence to be followed while calculating net cash from operating activities from the following:
(A) Calculation of cash generated from operation
(B) Adjustment for non-operating/non-cash charges
(C) Calculation of net profit before taxation and extraordinary items
(D) Calculation of operating profit before working capital changes

A

(A), (B), (C), (D)

B

(A), (C), (B), (D)

C

(B), (A), (D), (C)

D

(C), (B), (D), (A)

Answer

(A), (C), (B), (D)

Explanation

Solution

The correct sequence for calculating net cash from operating activities typically follows these steps:- (A) Start with the calculation of cash generated from operations.- (C) Next, calculate the net profit before taxation and extraordinary items.- (B) Adjust for non-operating/non cash charges to arrive at the cash flow from operations.- (D) Finally, calculate the operating profit before working capital changes.