Increasing accounts payable is considered what type of cash flow effect?

Increasing accounts payable is considered a positive cash flow from operating activities because it indicates that a company is delaying payments to its suppliers. When accounts payable increases, it means that the company is utilizing suppliers' credit to finance its operations, effectively conserving cash in the short term.

This action contributes positively to cash flow because it means the company retains cash that it could otherwise have used to settle its obligations immediately. As a result, this increase provides liquidity that can be utilized for other operational needs or investments. In the context of the operating cash flow statement, an increase in current liabilities such as accounts payable is added back to net income, reflecting a positive effect on cash flow from operating activities.

Conversely, a decrease in accounts payable would be viewed as a use of cash, thus negatively impacting cash flow, which further solidifies why an increase is seen as a positive cash flow effect in the operating section.