How to calculate cash flow for TATA motors?



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Hi,
Please find below the question with which I have a problem. I was wondering how the cash decreases by 5 crores

Assume that in July, Tata Motors paid Rs.5 Crores to an external IT consultant for a software project that took 6 months to complete. In July how much would Tata Motors' cash and net income decrease by due to this transaction?


1 Answer(s)


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Marc, Cash decreases by 5 crores because 5 crores was paid out to the IT consultant. Net income will not decrease by 5 crores since all the 5 crores will not be expensed in the same time period.