Question : For calculating 'cash flow from operating activities' from the given figure of 'Net Profit' earned during a year, how would you deal with if Decrease in Inventory?
Option 1: Added
Option 2: Deducted
Option 3: Both A and B
Option 4: None of the above

Question

Question : For calculating 'cash flow from operating activities' from the given figure of 'Net Profit' earned during a year, how would you deal with if Decrease in Inventory?

Option 1: Added

Option 2: Deducted

Option 3: Both A and B

Option 4: None of the above

Team Careers360 · Accepted Answer

Correct Answer: Added

Solution : Answer = Added

When calculating cash flow from operating activities, a decrease in inventory would be added to the net profit. This adjustment accounts for the fact that the decrease in inventory represents cash that was used to purchase goods, which is an operating activity and should be added back to the net profit.
Hence, the correct option is 1.

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Question : For calculating 'cash flow from operating activities' from the given figure of 'Net Profit' earned during a year, how would you deal with if Decrease in Inventory?Option 1: AddedOption 2: DeductedOption 3: Both A and BOption 4: None of the above

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Question : For calculating 'cash flow from operating activities' from the given figure of 'Net Profit' earned during a year, how would you deal with if Decrease in Inventory?
Option 1: Added
Option 2: Deducted
Option 3: Both A and B
Option 4: None of the above