Changes in Non-Current Liabilities
The changes in non-current liabilities (NCL) account will be either due to fresh issues of hares and debentures or their redemption. The increase in the NCL account is indicative of an additional issue of securities and, hence, is regarded as a source of funds, working capital. However, if it is due to the issue of bonus shares, it is not a source of funds. It simply amounts to reclassification of accounts, that is, reducing retained earnings/reserves and increasing equity share capital. It should be checked whether the new issue of securities is at par premium or discount. In case of the latter two situations, the net increase would not be a true representation of the source of funds. In case of the premium, the actual amount received would be more, while would more less if the new issue is made at discount, Likewise, in the case of the retirement of debt or preference shares care should be taken to ascertain whether the redemption is ;11 par premium or disconsolate.