true or false? changes in working capital are subtracted from net income on the cash flow statement.

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02-09-2022
Business

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true or false? changes in working capital are subtracted from net income on the cash flow statement.

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Mdrdnczidn Mdrdnczidn · Answer 1 · 2022-09-10T09:03:47-04:00

Changes in working capital are deducted from net income on the cash flow statement. The statement is therefore TRUE.

In more precise terms, operating cash flow of the cash flow statement is equal to net income less changes in working capital plus non-cash expenses.

Net Income - Changes in Working Capital + Non-Cash Expenses = Operating Cash Flow

Depreciation, increases in accounts receivable, and other non-cash and non-operating expenses must all be subtracted from the net income.

Additionally, operating cash flow may also be computed by adding the depreciation and subtracting the changes in working capital from net income.

Net Income + Depreciation - Changes in Working Capital = Operating Cash Flow

The ability of a business to make money overall is shown by operating cash flow.

Learn more about how to arrive at operating cash flows: https://brainly.com/question/28185713

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