CIMA BA3 · Chapter 12 · Question 2 of 10
A company's profit before tax for the year was $54,000. Depreciation was $12,600 and there was a loss on disposal of equipment of $1,400. During the year inventory increased by $4,300, trade receivables decreased by $2,100 and trade payables increased by $1,700. Ignoring interest and tax, what is the cash generated from operations?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $67,500
Explanation
Profit before tax $54,000 + depreciation $12,600 + loss on disposal $1,400 = $68,000. Less increase in inventory $4,300, add decrease in receivables $2,100, add increase in payables $1,700. Cash generated = $67,500.
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