Net working capital:
A) can be ignored in project analysis because any expenditure is normally recouped at the end of the project.
B) requirements, such as an increase in accounts receivable, create a cash inflow at the beginning of a project.
C) is rarely affected when a new product is introduced.
D) can create either an initial cash inflow or outflow.
E) is the only expenditure where at least a partial recovery can be made at the end of a project.

Question

Quizplus · Accepted Answer

Net working capital can create either an initial cash inflow or outflow depending on the changes in current assets and liabilities. For example, an increase in accounts receivable would require an investment of cash, while an increase in accounts payable would result in a cash saving. Therefore, net working capital is an important consideration in project analysis. The other statements are not accurate regarding net working capital.

Net Working Capital