Answer:
Decrease of net cash flow
Explanation:
Underthe indirect method, we calculate the cash flow based on the change in working capital:
The inventory, which is an asset will be purchased with cash or cash equivalent. Therefore, an increase on inventory produce a decrease of net cash flow.
If the inventory is purchased on account then, It will increase account payable, which represent an increase on the net cash flow. This generates a net effect of zero, 100,000 for account payable - 100,000 for inventory.
Which is what happens when purchase on account are made.
However, here we are asked for an increase on inventory only. We should simply state that this will represent a decrease in the cash flow for 100,000.
