Under this method, approximated profit is calculated depends on transactions of the ensuing period. Afterward, decrease or increase in working capital is determined adjusting the estimated profit through cash inflows and cash outflows. This is like cash flow statement. Some banks in India use forms for calculating working capital in this method. A specimen of such a form is specified below.
Computation of Working Capital
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Rs.
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Net Income
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..............
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Add: (i) Non-cash Items
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...............
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Working Capital Provided Operations
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... ... ... ...
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Add: (ii) Cash inflow Items
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..............
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Less: Cash Outflow items
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.
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Net Changes in Working Capital
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..............
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