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Hello tutor,
I have a q regarding repayment or changes/movement in LT liabilities or LT debts/borrowings.
as we know that it supposed to be reflected in cashflow under financing activities.
however can companies reflect this as part of working capital changes under operating activities?I really appreciate your kind input on the above. many thanks sir.
Hi,
No, the movement cannot be adjusted as part of working capital. Working capital is the inventory, receivables and payables that are used as short-term funding or to generate cash within the business. The debt/long-term borrowings are specifically there for the purpose of providing finance to the business.
Thanks
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