Calculate cash flow from Operating activities
(I)f R Ltd. is a manufacturing firm, or
(ii) ITR Ltd. is a financing company.
Cash Revenue from Operations
Collection from Trade Receivables
Wages paid to factory workers
Interest received
Dividend received
Cash purchases
Credit purchases
Payment to Trade Payables
Building purchased
Interest paid
interim Dividend paid
20,00,000
4,20,000
1,50,000
6,50,000
1,40,000
8,70,000
6,00,000
5,90,000
10,00,000
2,30,000
1,50,000
Answers
Explanation:
(i) ₹810000
(ii) ₹560000
Answer:
The manufacturing and financing company operating activities are a follows:
Explanation:
1. Manufacturer R Ltd.
Adjusting net income for non-cash transactions, changes in working capital and other operational activities is required to arrive at cash flow from operations.
Discrepancies in Net Income:
Let's say that your depreciation costs for the year amounted to Rs 3,00,000.
An increase of Rs. 4,20,000 in Trade Receivables
Salaries for manufacturing workers: Rs. 1,50,000
Interest earnings: Rs. 650,000
Rs. 1,40,000 Dividend Paid and Received
Lower Trade Receivables by Rs. 5,90,000
The cost of the building was Rs. 10,000,000.
Amount of Interest: Rs. 2,30,000
Rs. 1,50,000.00 given as an interim dividend.
Calculation:
Net income + depreciation expense + increase in trade receivables - increase in factory workers' wages + interest earned + dividends received - decrease in trade payables = cash flow from operational activities.
Operating cash flow = 0 (Net Income is not reported) + 3,000 + 4,000 - 1,50,000 + 6,000 - 1,40,000 - 5,90,000
Operating cash flow = Rs. 8,70,000
(ii) With regards to the finance firm ITR Ltd.:
Cash flow from operational operations is computed differently for financing firms like ITR Ltd. Interest income is added to net profit after deducting for in-kind receipts, stock and other non-cash items, and any changes in working capital.
Discrepancies in Net Income:
Spending cut of Rs. 1,000,000
An increase of Rs. 4,20,000 in Trade Receivables
The other current assets increased by Rs. 2,30,000.
Rs. 5,90,000 more owed to suppliers after a rise in trade payables
Calculation:
Earnings before interest, taxes, depreciation, and amortisation, plus changes in investments, trade receivables, other current assets, and payables, minus changes in investments, all equal cash flow from operating activities.
Operating cash flow = Rs. 6,50,000 + Rs. 0 (Depreciation Cost not mentioned) - Rs. 10,000,000 + Rs. 4,20,000 + Rs. 2,30,000 - Rs. 5,90,000.
Revenue generated by core operations comes to Rs. 7,100,000
Consider that for a financing firm like ITR Ltd., interest received and changes in working capital are the primary drivers of cash flow from operational operations.
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https://brainly.in/question/1407327
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https://brainly.in/question/14984575
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