The table below shows the changes in the net working capital items of ABC PLC. Discuss the impact of changes in net working capital items on the company's cash flow statement for the year of 2019 (Currency is $ )
| Account name | 2018 | 2019 | |
| Trade Receivable | 120 000 | 150 000 | |
| Trade payable | 320 000 | 240 000 | |
| Inventory | 160 000 | 220 000 |
Trade Receivables 120,000 150,000
Trade Payables
320,000
240,000 Inventories 160,000 220,000
Net Working Capital = Current Asset - Current Liabilities
= ( Trade Receviable + Inventory ) - ( Trade Payable )
(Currency is $ )
| Account name | 2018 | 2019 | |
| Trade Receivable | 120 000 | 150 000 | |
| Trade payable | 320 000 | 240 000 | |
| Inventory | 160 000 | 220 000 |
Net working Capital 2018 = ( 120,000 + 160,000 ) - ( 320,000)
= - $ 40,000
Net Working Capital 2019 = ( 150,000 + 220,000 ) - ( 240,000)
= $ 130,000
From the calculation Net working capital of 2019 has improve from 2018 which means company improve its short term liquidity.
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