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Decrease in inventory is already included in the COS. Why do we need to adjust it in the statement of cashflows when start from operating profit?
The amount charged in the SOPL is the inventory that was used. That is not equal to the cash that was paid.
Consider this:
Opening inventory 10,000
Purchases 0
Closinginventory 0The cost of goods sold in the SOPL is 10,000 (which reduces the profit)
The cash paid during the year is 0Have you watched my free lectures on this?
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