Q: If a company buys inventory on accounts payable, won't we be double-adjusting on the liabilities side for their cash outflow?
A: No. If a company purchased inventory on credit, it would increase both its inventory balance and its accounts payable balance by the same amount and the two transactions would offset each other. That is, the increase in inventory – a cash outflow – would be matched exactly by an increase in accounts payable – a cash inflow. The net result, in this instance, is no impact on cash flow or cash balances. But once the company pays the amount due its supplier, there is a cash outflow reflected in the decrease in accounts payable.
Q: I noticed that Slide 69 showed that the 2012 Maturities of Long Term debt were paid down. Where did it say they paid it down? Otherwise, wouldn’t it have carried to 2013 to be paid in 2013, just like how the 2013 amount accounts for both CMLTD and the non-current portion? Looking at that statement I conclude that they pre-paid their CMLTD in 2012 rather than in 2013 when it was due.
A: The 2012 maturities were paid down in the Operational Section of the 2013 UCA Cash Flow statement.
Therefore, the New 2013 Long Term Debt Calculation is as follows:
- 2013 amount = $10,003 +$24,328 + $25,593 + $81,316 = $141,240
- 2012 amount = $35,596 + $86,739 = $122,335, which is the amount remaining after the pay-down of $33,687 reported on the 2013 UCA Cash Flow Statement.
- Difference = $141,240 – $122,335 = $18,905 of new long-term debt