PLEASE HELP: Dividends and Operating Working Capital
Are dividends included or are they subtracted when calculating operating working capital? Thank you!
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They are not included since dividend payouts are not reflected on the balance sheet unless they are accrued. They will be included in that case as a current liability.
I am still a little unclear as to what you mean. Could you expand a bit more. I am sorry for my lack of knowledge on this topic.
Not included.
Think about it in terms of operating vs. financing activities. Dividend payouts are not directly tied to the core operations of a business, so exclude it from your calculation of OWC.
Thank you so much for responding to my post. This is also true if the line item is dividends payable, correct? Dividends payable as in an accrued expense on the liabilities side of the balance sheet. My book states that taxes payable should be included, which is why I am confused. There is no mention of dividends payable in this book. Thank you!
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