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Sir I don’t understand this question
A business’s bank balance increased by $750,000 during its last finacial year. During the same period it issued shares, raising $1 million and repaid a loan of $750,000. It purchased non-current asset for $200,000 and charged depreciation of $100,000. Receivables and Inventory increased by $575,000.
What is the profit for the year
It is a ‘work backwards’ question.
You know what the net cash inflow is (750,000).
You know what the cash flow for investing activities is, and also what the cash flow from financing activities is. So you can work backwards and calculate the cash flow from operating activities as the missing figure.
Once you know that, then you can adjust for the depreciation and the change in receivables and inventory to determine the level of profit.
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