With regards to the accruals formula,
accrualsCF = NI − CFO − CFI
Why is it that CFF is not apart of this formula? The way I think about the formula is as follows:
- makes sense that if NI is super high and CFO is super low or negative, that accruals would be really high (logic)
- why exactly would negative CFI over the year increase accruals?
- and why is CFF not a factor here?
Thanks!