Inventory and costs

Inventory is usually the largest current asset of a company that sells products. If the stock is higher at the end of the period at the beginning of the reporting period, the amount, the company has actually paid cash for this inventory more than what is listed company as expense the cost of good sold. When that occurs, the accountant inferred inventory of net income for the determination of profit cash flow increases.

fresh active prepaid account works in much the same way as the change in inventory and accounts débiteurs.Cependant accounts, changes in prepaid expenses are generally much smaller than changes in the other two active accounts.

Balance at beginning of prepaid expenses is loaded at the expense of the year, but money was actually paid year dernière.cette period, the company pays cash for the next period, which affects this period cash flow, but does not affect the net income up to the next period prepaid expenses. Simple, right?

As a company grows, it must increase its charges prepaid for things like insurance, premiums must be paid in advance of insurance coverage and its stocks of supplies of fire.Increase in accounts receivable, inventory and prepaid expenses are cash, awards that a company must pay for growth.Seldom find you a company that can increase its turnover increase by these assets.

The lagging behind the effect of free cash flow is the price growth of managers entreprises.Les and investors need to understand that increase sales without increasing accounts receivable is not a realistic scenario for the real business world croissance.Dans, you generally cannot assess the growth of income without incurring additional costs.