Page 97 of Edupristine Study Notes - B6- Top Level Planning & Analysis - CMA Part I

k.sankar.ra
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Page 97 of Edupristine Study Notes - B6- Top Level Planning & Analysis - CMA Part I

Postby k.sankar.ra » Sat Apr 30, 2016 6:56 am

In page 97, in the indirect method of computation of cash flows gives a
result of Rs 28.67 crores.
This includes a reduction for increase in inventory of Rs 14 crore, and an
addition for increase in accounts payable of Rs 6 crores,
the net result being a reduction of Rs 8 crores, being the amount of
settlement of accounts payable in cash, arrived at as below, i.e.,

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1 Opening balance of accounts payable Rs 30 crores
2 Increase on purchase of inventory in credit Rs 14 crores

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3 Total accounts payable Rs 44 crores
4 Closing balance of accounts payable Rs 36 crores

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5 Accounts payable settled in cash Rs 8 crores
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Since the cash payment affects only accounts payable,
this may not be said to be affecting cash from operations,
since this cash outflow did not affect the profit or loss statement.

Can you clarify this please ?

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