Arrange the following in the context of Cash Flow Statement

(A) Calculation of cash flow from Operating Activities

(B) Calculation of cash flow from Financing Activities

(C) Calculations of net increase/decrease in cash and cash equivalent during the year

(D) Calculation of cash flow from Investing Activities

(E) Calculation of net profit before tax and extraordinary item

Choose the correct answer from the options given below:

The correct option is E, A, D, B, C.

A Cash Flow Statement is prepared systematically following a standard sequence of steps to determine the net changes in cash and cash equivalents during an accounting period. The logical order of preparing the Cash Flow Statement is as follows:

1. (E) Calculation of net profit before tax and extraordinary items: This is the starting point for calculating cash flows from operating activities using the indirect method. Before adjusting for non-cash and non-operating items, we must determine the net profit before tax and extraordinary items.
2. (A) Calculation of cash flow from Operating Activities: Using the net profit calculated in step E as the base, adjustments are made for non-cash items, non-operating items, and changes in working capital (receivables, payables, inventory) to arrive at the net cash generated from operating activities.
3. (D) Calculation of cash flow from Investing Activities: This step involves calculating cash inflows and outflows related to the purchase and sale of long-term assets (like property, plant, equipment) and non-operating investments.
4. (B) Calculation of cash flow from Financing Activities: This step calculates the cash flows arising from transactions that affect the size and composition of the owner's capital and borrowings of the enterprise (such as issuing shares, raising loans, repayment of debt, and payment of dividends or interest).
5. (C) Calculations of net increase/decrease in cash and cash equivalents during the year: Finally, the net cash flows from Operating (A), Investing (D), and Financing (B) activities are aggregated to find the net increase or decrease in cash and cash equivalents during the year. This net change is then added to the opening balance of cash and cash equivalents to reconcile with the closing balance.

Therefore, the correct chronological sequence is E → A → D → B → C.