During an annual review, a credit analyst observes that a retailer's Accounts Payable balance increased significantly over the reporting period. Under the indirect method, how is this increase in Accounts Payable handled when calculating cash flow from operations?

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This is correct. An increase in Accounts Payable indicates that the company has acquired goods or services without yet paying cash. This acts as a source of cash (similar to a short-term loan) and is added to Net Income to arrive at cash from operations.

During an annual review, a credit analyst observes that a retailer's Accounts Payable balance increased significantly over the reporting period. Under the indirect method, how is this increase in Accounts Payable handled when calculating cash flow from operations?

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