Question

if credit purchases are Rs. 20,00,000 and cash purchase are 25% of total purchase. Find out the Cash Flow from operating activities?

Answer 1

Answer:

500000

Explanation:

2000000

25 % is of its half of half so thats answer is 500000

Answer 2

Total Cash outflow should be Rs.6,66,667

Explanation:

Let Total Purchases be "x".

Total Purchases=Cash purchases + Credit Purchases

It has been provided in the question that Cash purchases are equal to 25% of Total Purchases and Credit Purchases are Rs.20,00,000.

Therefore,

$x = 0.25 \times x + 20,00,000$

Taking 4 as LCM,

$4x = x + 80,00,000$

$3x = 80,00,000$

$x = 80,00,000 \times 1/3$

$x = 26,66,666.667$

Therefore,Total Purchases are equal to Rs.26,66,667(rounded off).

Now,Cash Purchases = 25% of Rs.26,66,667

Therefore,Total Cash outflow because of cash purchases should be Rs.6,66,667.