Short term borrowing (STB) is from Bank in the form of Over draft (OD). It is backed with Account Receivables as Collateral (Src:AR)
As some portion of Trade Receivables (TRs) is already used / received indirectly in the form of Short term borrowings, the same needs to be adjusted from the overall TRs…that’s the reason it is shown under Operating Activities → Adjustments for Changes in Working Capital so that this STB amount is deducted from the TRs
For example, if the total TRs is 100/- and from that company has already used 40/- in the form of STBs / OD …then the balance TRs has to be 100-40 = 60/- and can’t be still shown as 100/-
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