4. Operation Cash flow Indirect Method
Net profit before tax and Extradinory items (A)
Add : Non Cash flow and Non Operating items debited to Profit and Loss Account (B)
i) Depriciation
Ii) Amortisation of Intangiable assets
Iii) loss of sale of Fixed Assets
Iv) Loss on sale of Investments
V) Provision for Tax
Vi) Divident Paid
Less : Non Cash flow and Non Operating items credited to Profit and Loss Account (C)
i) Profit on sale of Fixed Assets
Ii) Profit on sale of Investments
Less : Net Tax paid (Tax Paid/ Tax Refund) (D)
Less : Extradinory items(E)
Operation cash flow before Working Capital Changes : (A)+(B)-(C)-(D)-(E)
5. Operation Cash flow (1)= Operating Cash flow before working
capital changes + Effect of Changes in working Capital
Effect of Changes in working Capital : Decrease in Current Assets +
Increase in Current liabilities – Increase in Current Assets – Decrease in
Current Liabilities.
6. Operation Cash Flow from Investing
activity (2)
Cash Inflows
Cash flow from sale of assets ( Land , Building, Goodwill)
Cash flow from sale of Shares, Debentures of other Companies
Receipt of Loans Given
Cash outflows
Purchase of Fixed assets (Tangible Assets)
Purchase of Intangible assets
Purchase of Investments ( Shares, Debentures)
Purchase of Government bonds
Loan to third party
7. Operation Cash Flow from Finance
Activity (3)
Cash Inflows
I) issue of Equity and preference share capital
Ii) Issuance of Debt
Cash Outflows
i) Buy back of shares
Ii) Redemption of shares
8. Cash Flow at the end of the period = (1)+(2)+(3)+Opening Cash and Cash
Equivalents at the beginning of the year.
