All increases in Current Liabilities cause decrease in Working Capital and leads to increase in cash and vice versa.
| Increase in Current Liabilities Decrease in Working Capital, Increase in cash | Decrease in Current Liabilities Increase in Working Capital, Decrease in Cash |
| Increase in Creditors implies that cash payments to creditors are less than the purchase figure | Decrease in Creditors means more cash payments than the purchase figures |
| Increase in Income in advance implies greater cash inflow | Decrease in Income in advance means lesser cash inflow |
Adjustments related to changes in current liabilities to compute cash flows generated from operations.
Accounts and Trade Notes Payable:
- Increases—add to net income to get operating cash flow
- Decreases—subtract from net income to get operating cash flow
Other Liabilities (e.g., accruals), excluding nontrade payables:
- Increases—add to net income to get operating cash flow
- Decreases—subtract from net income to get operating cash flow
