Which of the following are cash inflows from net working capital? I. increase in accounts payable
II) increase in inventory
III) decrease in accounts receivable
IV) decrease in fixed assets

Question

Quizplus · Accepted Answer

Net working capital is calculated as the difference between current assets and current liabilities. An increase in accounts payable means the company is able to defer payment to suppliers, resulting in an increase in cash inflow. A decrease in accounts receivable implies that customers are paying their debts, which increases the cash inflow. An increase in inventory means the company has invested more cash in inventory, resulting in a cash outflow. A decrease in fixed assets is not a cash inflow or outflow from net working capital.

Which of the Following Are Cash Inflows from Net Working