A sole trader business, Elvette and Co., made an operating profit of £28 800 in its financial year ended 31 May 20X4, after charging depreciation of £17 300. At 31 May 20X3, Elvette's current assets (excluding cash) less current liabilities total (i.e.the total of inventory, trade receivables and trade payables) was £63 330.On 31 May 20X4 the equivalent total was £72 280.
What was Elvette's net cash inflow in respect of operating activities for the year ended 31 May 20X4?
A)£2550
B)£37 150
C)£19 850
D)£55 050

Question

Quizplus · Accepted Answer

The net cash inflow from operating activities is calculated by adjusting the operating profit for non-cash items and changes in working capital. Starting with the operating profit of £28,800, add back the non-cash depreciation of £17,300, resulting in £46,100. The change in working capital is £72,280 - £63,330 = £8,950. Subtract this from £46,100 to get the net cash inflow of £37,150.

A Sole Trader Business, Elvette and Co