When preparing a statement of cash flows using the indirect method, how should an increase in trade receivables and a depreciation charge be treated in reconciling profit before tax to cash generated from operations?

Under the indirect method, we start with profit and adjust for non-cash items and working capital changes. Depreciation is a non-cash expense deducted to find profit, so it must be added back. An increase in trade receivables means sales were made on credit and cash has not yet been received, so this increase must be deducted from profit.