Question
If the Opening Debtors were Rs.50,000 and Closing
debtors are Rs.40,000, what effect will it have on the cash flow statement?Solution
Change in debtors is a working capital change which will reflect under operating cash flow. Here, the change in the debtors decrease in debtors by Rs.10,000 (opening Rs.50,000 less closing Rs.40,000). A decrease in current assets (here debtors) indicated the decreased cash blockage or recovery of cash from debtors. This will be taken as an implicit inflow under Working Capital changes.
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