Financning payables reduces operating cash flow??

CFA Level I FRA
#1

hi all, i am looking for some help around a question in FRA which i am confused about.

Can someone please explain how financing payables reduces operating cash flow- Schweser notes reasons it as payables are classified as short-term debt.

I would have thought that it increases operating cash flow, in the sense that instead of now cash going out to payables (which would have been classified as CFO), cash is going out to the financier (classified as CFF) - so effectively CFO would be reported higher in case of financing accounts payables.

Please can someone point out where am misaken, your help is much appreciated.

Thanks

#2

Can you tell me where this is written in Schweser (which chapter/answer to a question)? I’m having a problem understanding what you mean by financing payables.

regards

#3

You borrow money (CFF inflow) and pay payables (CFO outflow). CFF is up, CFO is down.

#4

thanks all, i have now understood where i was going wrong.

wojtek - i was talking about financing accounts payables.

#5

ok, glad to hear you are ok now.