Net working capital requirements often create a cash outflow at the beginning of a project. It reflects the current assets and liabilities of a company and is an important component of project analysis as it affects the cash flows and profitability of the project.

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Net Working Capital

Question 36

Multiple Choice

Net working capital

A) can be ignored in project analysis because any expenditure is normally recouped by the end of the project.
B) requirements generally,but not always,create a cash outflow at the beginning of a project.
C) expenditures commonly occur at the end of a project.
D) is ignored in project analysis because any change in net working capital is a sunk cost.
E) is the only initial expenditure where at least a partial recovery can be made at the end of a project.

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