question about changes in net working capital (1 Viewer)

[RakeshCristoval]

hey guys,

so in my tutorial, we went through this question (attached).

from my understanding the formula for changes in net working capital is:

the change in cash + change in accounts receivable + inventory - accounts payable

for year 1, the changes in working capital are -14 million, but im not sure why it is minus, not plus? im not getting why its - cash - accounts receivable - inventory + acc payable.

if someone could please explain to me as to why this is, thatd be great thanks in advance

 

[idkkdi]

hey guys,

so in my tutorial, we went through this question (attached).

from my understanding the formula for changes in net working capital is:

the change in cash + change in accounts receivable + inventory - accounts payable

for year 1, the changes in working capital are -14 million, but im not sure why it is minus, not plus? im not getting why its - cash - accounts receivable - inventory + acc payable.

if someone could please explain to me as to why this is, thatd be great thanks in advance

i reckon ur tutor was being a monkey.

 

[jimmysmith560]

It's the other way around.

Year 1:

6 + 21 + 5 - 18 = 14 million