Using the data given in Illustration 1, calculate cash flows from operating activities using indirect method.

Explanation

You will notice that the amount of cash flows from operating activities are the same whether
we use direct method or indirect method for its calculation.
Working Notes :
The net profit before taxation and extraordinary items has been worked out as under:
Net Profit = Rs 32,000
+ Income Tax = Rs 10,000
= Net Profit before Tax and Extraordinary Items = Rs 42,000