Accounts Payable to be included while deriving NOA / NMA?

CFA Level II
#1

I’m writing to clarify the defintion of calculating Operating Liabilities and Monetary Liabilities. 1. Should we include the Accounts Payable while calculating the Operating Liabilities for NOA (Net Operating Asset) under aggregate accrusal? 2. Should we include the Accounts Payable while calculating the Monetary Liabilities for NMA (Net Monetary Asset) under temporal method? Thanks, JW

#2

1: NO. Operating Liability = Liability - Notes payable - Long term debts only 2: YES.

#3

think passme misread that. it’s yes for both, isn’t it?

#4

prophets, I double checked, When calculating NOL, AP is not interest-bearing, therefore not really an operating liability. just remember the formula below NOL: Liability less notes payable less long term debts. Included in net monetary liability, you would want to add up the following: Accounts payable, notes payable, long term debts

#5

Net Operating Assets= (Total Assets - Cash and Cash Investments) - (Total Liabilities - Long term Liabilities - Notes Payable). NMA = Yes it includes A/P

#6

passme Wrote: ------------------------------------------------------- > 1: NO. Operating Liability = Liability - Notes > payable - Long term debts only > 2: YES. I guess I misunderstand your wording vs. the wording of the original question: The Equation --> All liabilities - LT Notes - ST Notes by definition includes Accounts Payable in it (and all other liabilities that are not interest bearing debts). So yes, it’s included in the process. It’s in there by virtue of definition.

#7

Bilal Wrote: ------------------------------------------------------- > Net Operating Assets= (Total Assets - Cash and > Cash Investments) - (Total Liabilities - Long term > Liabilities - Notes Payable). > > NMA = Yes it includes A/P It’s Net Operating Assets= (Total Assets - Cash and Cash Investments) - (Total Liabilities - Long term Liabilities - current portion of long term debt). But Accounts payable is not included in NOA calculations.

#8

just remember to back out TOTAL DEBT. A/P or other current/non-interest bearing liabilities are NOT DEBT.