Q: A question on UCA Cash Flow relating to an Auto Dealership. Is it ever appropriate, especially in an Auto Dealership scenario, to consider the swing in Inventory with the movement in Floor-Plan debt (regardless of direction of each). In my current example, NCAO is very negative. However, it’s due to the inventory swing, which was really supplemented by the floor-plan line. So I know I can’t change the structure of the UCA cash flow, but would a statement like “despite the NCAO short-fall, it’s fair to say that most of the inventory build-up, was supplemented via the floor-plan line”?
A: Yes, I think it's very appropriate to make the adjustment you suggest, i.e., matching the change in the flooring line with the change in inventory, since the inventory purchase was only possible via the flooring line.
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