Question

If credit purchases are 2000000 and cash purchases are 25 % of the total purchases. Find out cash flow from operating activities

Answer 1

Dear Student
Ans -

Particulars		Amt
Credit Purchases		2,000,000
Let Total Purchases		X
Therefore Cash Purchases	25% of Total Purchases	0.25 X
Credit Purchases	Total Purchases - Cash Purchases	0.75 X
From the above, Total Purchases	(20,00,000 / 0.75)	2,666,667
Cash Purchases	(26,66,667 x 25/100)	666,667
Hence Cash outflow from operating activities		666,667

Regards