Determine the movements in working capital, Financial Management

Assignment Help:

Movements in working capital

The year-end balances of trade, inventories and other receivables and payables are taken for current year-end as well as last year-end statement of financial position

	Decrease	Increase
Inventories	Cash inflow	(Cash outflow)
Receivables	Cash inflow	(Cash outflow)
Payables	(Cash outflow)	Cash inflow

An increase in inventories implies that more cash has been spent to obtain the inventories; hence it is a cash outflow.
A decrease in inventories implies less cash has been used to obtain inventories;hence it is a cash inflow.
An increase in trade receivables'implies that more credit customers are taking longer to pay or takingcredit,which means less cash for company, so cash outflow.
A decrease in trade receivables implies less credit customers, therefore cash inflow.
A decrease in trade payables implies the business is paying the suppliers quicker, resulting in cash outflow.
An increase in trade payables means that business is taking longer to pay the suppliers, so holding the cash in the business longer implying it's a cash inflow.

Related Discussions:- Determine the movements in working capital

The authority and duties of shareholders, The authority and duties of membe...

The authority and duties of members (shareholders) Members and shareholders shall together and severally protect, conserve and actively exercise the supreme authority of the co

Introduction to mortgage-backed securities, A mortgage may be defined as a ...

A mortgage may be defined as a pledge of property to secure payment of a debt. Depending upon the terms of mortgage agreed upon between the lender and the borrower, mor

Define the constructive receipt, Q. Define the Constructive Receipt? Co...

Q. Define the Constructive Receipt? Constructive Receipt - A taxpayer is considered to have received income even though monies are not in hand, it may have been set aside or ot

Bajaj electronics caselet, how would you judge the potential profit of Baja...

how would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth Plastics and give your views to increase the profit?

Factors affecting choice of a minimum cash balance amount, Explain the fact...

Explain the factors affecting the choice of a minimum cash balance amount. The smallest cash balance amount is determined by how easy it is to raise funds when needed, how expe

Risk-free rate, Assume you manage a $4.42 million fund that having of four ...

Assume you manage a $4.42 million fund that having of four stocks with the following investments: Stock Investment Beta A

Money market instruments, Just as any other financial market, money m...

Just as any other financial market, money market also involves transfer of funds in exchange for financial assets. Because of the nature of the money market, the

Observation of capital structure, Q. Observation of capital structure? ...

Q. Observation of capital structure? Droxfol Co has long-term funding provided by ordinary shares preference shares and loan notes. The rate of return necessary by each source

Profit maximisation decision criterion, Profit Maximisation Decision Criter...

Profit Maximisation Decision Criterion According to this approach, actions which increase profits must be undertaken and those that decrease profits are to be avoided. In speci

Random number generation, Random Number Generation Since we have said t...

Random Number Generation Since we have said that competitors' average price, quantity sold and cost behave in a random fashion but follow a normal distribution, if we want to d

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages