Cash flows from operating activities is a section of the statement of cash flows that shows the changes that happened in cash as a result of operations in an accounting period. This section includes adjustments in the operating profit to reach a final figure of cash that actually spent or generated as a result of operating activities. The working starts from the operating profit figure that is adjusted for non-cash items like depreciation and amortization, gain on sale of fixed assets. If the working is started from net profit, then interest and taxes not paid in cash are also adjusted. The working capital changes are also incorporated in this section to see the cash inflows or outflows from increase or decrease in inventories, accounts receivables, and accounts payables.
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Cash flows from operating activities: |
|
|
Operating profit |
50000 |
|
Add: Depreciation |
4000 |
|
Add: Amortization |
3400 |
|
Less: Gain on sale of Plant |
-5600 |
|
Less: Increase in inventories |
-7000 |
|
Add: Decrease in accounts receivables |
12000 |
|
Less: Decrease in accounts payables |
-8000 |
|
Less: Finance cost paid |
-6700 |
|
Less: Tax Paid |
-24700 |
|
Net cash flows generated from operating activities |
17400 |
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