The situation
Profit is ₹30 lakh including a ₹5 lakh gain on equipment sale. Depreciation is ₹7 lakh. Receivables rise ₹4 lakh and payables fall ₹2 lakh. Ignore other adjustments.
Your task
Build the operating cash bridge.
Reveal step-by-step solution
Set up the problem
Start with ₹30 lakh and add ₹7 lakh depreciation. Remove the ₹5 lakh gain because sale proceeds belong in investing cash.
Work through the numbers
Subtract ₹4 lakh for receivables growth and ₹2 lakh for reduced payables.
Interpret the result
Operating cash is ₹30 + ₹7 − ₹5 − ₹4 − ₹2 = ₹26 lakh. Report sale proceeds separately in investing cash.
What to remember
Reverse noncash items and remove gains whose cash flows belong in another section.