Is Accounts Payable working capital?

CFA Level II
#1

Net working capital=non-cash current assets-non-debt current liabilities I know that accounts receivable is working capital because it’s a non-cash asset. But isn’t accounts payable a short-term debt? I always assumed accounts payable was the evil twin (i.e., polar opposite) of accounts receivable.

#2

YES IT IS.

#3

To add on. you include the evil twin as you call it, in the Working capital. so now why would you leave out one who is eviller…

#4

You guys are soooooooooo awesome and prompt.

#5

Notes payable

#6

sorry thought you were asking who you leave out.

#7

Yes

#8

wait wait so you leave OUT notes payable, i.e., you don’t include it in working capital?

#9

notes payable is typically interest-bearing, making it a financial liability rather than operating liability

#10

In practice, I leave out notes payable since it’s debt. I’m pretty sure cfai would instruct to do the same

#11

oh ok. so accounts receivable and accounts payable are working capital, but notes payable and notes receivable are not?

#12

I would not take notes payable and receivable as working capital from the definition, working capital is non cash current asset, while working liability is non debt current liability.

#13

Short term debt, like notes payable, and current portion of LT debt are not included.

#14

Can someone give a final confiration about the following 2 things. 1. AR and AP are WC accounts 2. NP and NR are not a WC accounts

#15

AR and AP are WC. NP, I have heard of. But Notes Receivable is not something I have seen too often. If there is something like NR, NP and NR would constitute debt, and hence would not be part of WCInv.

#16

definitely leave out NP from WCinv–i did a qbank vignette problem on this from ss 12 the other day and it was left out