Explain the operating activities on cash flow.

Ans. Operating Ratio: Operating activities are related to main business activities of enterprise giving capital principal revenue to enterprise. It excludes investing and financial activities.

Examples of cash inflow from operating activities are:

(1) Cash receipts for cash sales.
(2) Cash receipts from debtors.
(3) Cash receipts from commission
(4) Other revenue receipts.

Examples of cash outflow from operating activities are:

(1) Purchase of goods for cash.
(2) Payment to creditors
(3) Payment of operating expenses.

(4) Payment of taxes etc.