Net working capital is often affected by the additional sales generated by a new project, as these sales can increase the need for inventory and receivables, thereby affecting the net working capital.

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Net Working Capital

Question 256

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 inflow at the beginning of a project.
C) Expenditures commonly occur at the end of a project.
D) Is frequently affected by the additional sales generated by a new project.
E) Is the only expenditure where at least a partial recovery can be made at the end of a project.

Correct Answer: