Question

Explain the following :

Operating activities in cash flow.

Answer 1

These are the routine and recurring activities of a business, i.e. activities related to core operations of the business. They reflect the result of net cash flow (used or generated) of the company’s normal business operations. All the inflows, such as receipt from sale of goods/services etc and outflows, such as payment to suppliers, form part of operating activities, and the net result depicts whether the business is operating efficiently or not.