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Investment advice and corporate finance
Module 12Investment Management and Corporate FinanceKenanga Bhd's profit before tax was RM160 million after depreciation of RM30 million. Trade receivables rose RM20 million, inventories rose RM15 million, trade payables rose RM10 million and tax paid was RM40 million. Using the indirect method, what is its net cash from operating activities?
Start with profit before tax (160), add back non-cash depreciation (+30), deduct the increases in receivables (−20) and inventories (−15), add the increase in payables (+10), then deduct tax paid (−40): 160 + 30 − 20 − 15 + 10 − 40 = RM125 million. RM165 million forgets the tax paid. RM145 million adds the receivables increase instead of deducting it. RM115 million deducts the payables increase instead of adding it. Source: SIDC Module 7 Study Outline (Jul-Dec 2026) Topic 2 Elements of Financial Statements, 2.5; MASB, Malaysian Financial Reporting Standards (MFRS 101 Presentation of Financial Statements; MFRS 107 Statement of Cash Flows; MFRS 116; MFRS 10 and MFRS 3 for groups) (as at October 2026).
Getting the sign of working capital changes wrong: higher receivables and inventory use cash; higher payables provide it.
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