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Dear sir,
Could you please help me to solve this question.
A business’s bank balance increased by $750,000 during the last financial year. During the same period it issued shares of $1 million and repaid loan notes of $750,000. it purchased non-current assets for $200,000 and charged depreciation of $100,000. Working capital (other than bank balance) increased by $575,000.
What was it’s profit for the year?This is a cash flow question done ‘backwards’ 🙂
Cash from operating activities X
Cash from investing activities (200,000)
Cash from financing activities 250,000Increase in cash 750,000
So cash from operating activities = 700,000
This is profit + depreciation – increase in working capital
So……profit = 700000 – 100,000 + 575000
🙂
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