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.
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