When there is a $3,000,000 decrease in inventory and a $2,000,000 decrease in accounts payable,cash flow from operating activities increases by $1,000,000.

Question

Quizplus · Accepted Answer

A decrease in inventory would increase cash flow as it indicates that less money has been spent on purchasing inventory. A decrease in accounts payable would also increase cash flow as it indicates that less money has been paid towards outstanding debts. Therefore, the given statement is true.

When There Is a $3,000,000 Decrease in Inventory and a $2,000,000