Net increase in working capital other than cash and cash equivalents will increase, decrease or not change cash flow from operating activities. Give reason in support of your answer. (C.B.S.E. 2017)

SOLUTION

Increase in Working Capital will result in decrease in cash flow from operating activities. Reason is that increase in working capital is due to increase in Current assets (i.e., inventory and trade receivables) over Current liabilities. This results in Outflow of Cash.


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