Final answer:
An increase in accounts payable leads to an increase in net cash flow from operating activities, whereas a decrease in accounts payable causes a decrease in net cash flow. Similar to a country's current account, the balance between money inflows and outflows impacts the financial health.
Step-by-step explanation:
A decrease in accounts payable will result in a decrease to the net cash flow from operating activities. Conversely, an increase in accounts payable will result in an increase to the net cash flow from operating activities.
This is because when a company has more accounts payable, it means that it has not yet paid out cash for expenses and purchases. The money is still in the company's account, hence increasing the net cash flow. However, when accounts payable decreases, the company is paying off its debts, which involves spending cash, thus reducing the net cash flow from operating activities.
Just as with the country's current account, where outflows of money, such as payments for imports, can affect the account's balance, similar principles apply to the cash flow from operations for a company. If the company's cash outflows exceed the inflows, it will have a negative impact on the net cash flow.