Why is Depreciation Added in Net Profit for Calculating Cash Inflow
Channel: Svtuition
Date: 2013-05-09

I try to explain its clear answer. Depreciation is loss of any fixed asset. But we does not pay it in cash. But it is deducted from total incomes in profit and loss account. But it is not outflow of cash. So, if we have given the net profit and we have to calculate the cash from operation or cash inflow, it is very necessary to add depreciation. By adding depreciation, we are cancelling already deducted depreciation in profit and loss account.