Q. What is meant by funds from operation? How is it determined ?

Funds from Operation = Net Sales Cost of goods sold Operating Expenses. Funds from operation means Operating Profit, which is calculated after deducting cost of goods sold and operating expenses from the amount of net sales. Funds from Operation may also be calculated in the following manner: Rs. XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Net Profit (for the current year) Add: Non-cash and non-operating items like Depreciation Profit transfer to General Reserve/other Reserves Profit transfer to Sinking Fund/other Funds Provisions made during the year (Except provision on debtors) Loss on sale of Investment Loss on sale of Fixed Assets Proposed Dividend Interim Dividend Premium on Redemption of Preference Shares/Debentures Writing off: Goodwill Preliminary Expenses Discount on issue of shares and debentures Patent Right/Copy Right/Trade Marks Underwriting Commission Less: Non-cash and non-operating incomes like Gain on sale of Investment Gain on sale of Fixed Assets Appreciation Rent from Tenants Interest/Dividend received Refund of Tax Excess provision written back etc. Funds From Operation