Question

Does account payable go at the start of the capital budgeting report as a positive cash flow at the start or a negative cash flow?

Heres the example.

"If the directors approve the Luddenham store Lovisa anticipates that the store will require $400,000 of inventory today, on top of the existing level of $28.4 million. Accounts payable will increase by $270,000 in 2020, and accounts receivable will increase from the current figure as stated on the HY20 Balance Sheet (see Presentation) to $7.4 million if the Luddenham store proceeds."

Answer 1

Account payable go at the start of the capital budgeting report as a negative cash flow at the start of the project.

Account payables represent the amount of stock that has been taken on credit from the supplier. It is component of working capital.

Working Capital = Current Assets - Current Liabilities (including Accounts Payable)

So if the start of project means the accounts payable increase and working capital investment decrease.

Thus account payable go at the start of the capital budgeting report as a negative cash flow at the start of the project.