Week 3 - Lecture 15

Lecture 15 : Cash Flow Statement 2
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[@88pianissimo90]

Thank you sir

[@shaikparveenbanu9770]

Thank you sir 🙏

[@shaikparveenbanu9770]

Thank you sir

[@sauravkotnala9925]

Why interest paid is added

[@sukumarandurai4712]

Interest paid is added to profit amount to arrive at funds generated from operations because the company paid cash/cash eq as interest to the lenders which is where our cash left us during this period. Since we are working in the indirect method, where we start with bare minimum (our profit after tax and extra ordinary, exceptional and dividend) and add back all the cash items we spent, remove all the non cash items we reported in P&L and account for (increase/decrease) any credit sale/receipt of money/credit purchase/payments made. Hope this is clear!

[@hssy2jrocker]

We start from Profit in indirect method. Things like interest paid were deducted. So now we need to add them back to arrive at cash flow.