ACCA FR · Chapter 14 · Question 2 of 15
Kudu Co's profit before tax for the year was $500k, after charging depreciation of $120k, a loss on disposal of plant of $10k and finance costs of $30k. During the year inventories increased by $40k, trade receivables decreased by $25k and trade payables decreased by $15k. What is cash generated from operations?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $630k
Explanation
Cash generated from operations = PBT 500 + depreciation 120 + loss on disposal 10 + finance costs 30 (added back, as interest paid is shown separately) - increase in inventories 40 + decrease in receivables 25 - decrease in payables 15 = $630k.
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