In the calculation of net profit of Rs. 15,00,000 for the period, Rs. 20,000 profit on sale of an asset and Rs. 10,000 depreciation have been taken into consideration. In this case funds from operations will be

Rs. 15,00,000
Rs. 15,30,000
Rs. 14,90,000
Rs. 15,10,000

The correct answer is: C. Rs. 14,90,000

Funds from operations (FFO) is a measure of a company’s cash flow from its operating activities. It is calculated by adding back non-cash expenses, such as depreciation and amortization, to net income.

In this case, the net profit of Rs. 15,00,000 includes a profit on sale of an asset of Rs. 20,000 and depreciation of Rs. 10,000. Therefore, the funds from operations are calculated as follows:

FFO = Net income + Depreciation + Amortization
= Rs. 15,00,000 + Rs. 10,000 + Rs. 20,000
= Rs. 14,90,000

Option A is incorrect because it is the same as the net profit. Option B is incorrect because it includes the profit on sale of an asset, which is a non-cash item. Option D is incorrect because it subtracts the depreciation, which is a non-cash item.

Exit mobile version