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Can you explain to me the impact that Net Cash Accrual has on working capital?

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Question added by Ryan Espiritu , Financial Accountant , AICI - American International Contractors Inc.
Date Posted: 2013/06/11
VICTOR SAJJAN SINGH
by VICTOR SAJJAN SINGH , Finance Manager , HAMDAN GROUP's DARBANI OMAR TRADING & CONTRACTING LLC

Your phrase " Net Cash Accrual" the2 words(Net Cash) n last word(Accrual) r in conflict with each other.
Net Cash is Total Inflow - Total Outflow during a defined period.
Accruals are Non-cash-based assets(AR, Goodwill etc) & Liabilities booked not paid in cash yet (AP, NP, etc) on a BS or SOA date.
And Manipulating accruals can very much be part of Earning Calculation.
Also Manipulating Accruals can ensure either u over-show / under-show your Current assets & CL which directly impacts Net Working Capital= CA-CL.
There is another phrase Total Net Accruals = Earning(NP) based on Accruals system of Accounting - Less Earnings on CASH BASED system.

Muhammad Asif Jajja
by Muhammad Asif Jajja , Accountant , Pakistan Veterinary Medical Council

Working Capital represent "operating liquidity" available to a business we can understand the impact of cash accrual on working capital by a simple equation as follows Working Capital = Current Assets(Inventory +Receivable) - Current Liabilities (Payable) W.C.
increases when the current assets increase or current liabilities decrease and vice versa situation can be handle by W.C.
management

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