Question

Net increase in working capital other than cash and cash equivalents will increase, decrease or not change cash flow from operating activities. Give reason in support of your answer. 

Answer 1

Net increase in working capital means that the decrease in current assets and increase in current liabilities (↓ in CA & ↑ in CL, being the inflows) is more than the increase in current assets and decrease in current liabilities (↑ in CA & ↓ in CL, being outflows). So, the net effect is increase in cash flow from operating activities.