The following information has been extracted from the books of Ram Lal Ltd.:
Comparative Financial Data as on 31st March, 2024 and 2023
Particulars 31.03.2024 (₹) 31.03.2023 (₹) Surplus (P&L) 17,00,000 8,00,000 Patents -- 50,000 Sundry Debtors 5,80,000 4,20,000 Sundry Creditors 1,40,000 60,000 Cash and Cash Equivalents 2,00,000 90,000
Additional Information:
Interim dividend paid during the year was \textrupee{ 1,20,000}.
Comparative Financial Data as on 31st March, 2024 and 2023
| Particulars | 31.03.2024 (₹) | 31.03.2023 (₹) |
|---|---|---|
| Surplus (P&L) | 17,00,000 | 8,00,000 |
| Patents | -- | 50,000 |
| Sundry Debtors | 5,80,000 | 4,20,000 |
| Sundry Creditors | 1,40,000 | 60,000 |
| Cash and Cash Equivalents | 2,00,000 | 90,000 |
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Solution and Explanation
Cash Flow from Operating Activities (Indirect Method)
Net Profit before Tax and Extraordinary Items:
Increase in Surplus (P&L) = ₹17,00,000 − ₹8,00,000 = ₹9,00,000
Add: Interim Dividend Paid = ₹1,20,000
Total Net Profit during the year = ₹9,00,000 + ₹1,20,000 = ₹10,20,000
Adjustments for Changes in Working Capital:
- Increase in Sundry Debtors = ₹5,80,000 − ₹4,20,000 = ₹1,60,000 ⇒ Outflow (−)
- Increase in Sundry Creditors = ₹1,40,000 − ₹60,000 = ₹80,000 ⇒ Inflow (+)
- Decrease in Patents = ₹50,000 − ₹0 = ₹50,000 ⇒ Non-cash item ignored
- Increase in Cash and Cash Equivalents = ₹2,00,000 − ₹90,000 = ₹1,10,000 ⇒ Result (not adjustment)
Net Change in Working Capital:
Change = (−₹1,60,000) + ₹80,000 = −₹80,000
Net Cash from Operating Activities:
\[ \text{Net Cash from Operating Activities} = ₹10,20,000 - ₹80,000 = ₹9,40,000 \]
Answer: ₹9,40,000
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