In 2012,P Co reported an increase in trade receivables of $303 million,and an increase in inventory of $284 million.They also experienced an increase in short-term borrowings of $3,921 million and an increase in trade payables of $253 million.Calculate the net cash effect of these changes.
A)$3,587 million decrease
B)$4,761 million increase
C)$3,587 million increase
D)$4,761 million decrease

Question

Quizplus · Accepted Answer

The net cash effect is calculated by considering the changes in working capital: increase in trade receivables ($303 million) and inventory ($284 million) decrease cash, while increase in short-term borrowings ($3,921 million) and trade payables ($253 million) increase cash. The net effect is $3,921 + $253 - $303 - $284 = $3,587 million increase.

In 2012,P Co Reported an Increase in Trade Receivables of $303