Shannon's Irish Cookware is implementing a project that will initially increase accounts payable by $5,000, increase inventory by $3,200, and decrease accounts receivable by $1,800.All net working capital will be recouped when the project terminates.What is the cash flow related to the net working capital for the last year of the project?

Question

Quizplus · Accepted Answer

The net working capital is the sum of the changes in accounts payable, inventory, and accounts receivable. In this case, the net working capital is $5,000 + $3,200 - $1,800 = $6,400. Since all net working capital will be recouped when the project terminates, the cash flow related to the net working capital for the last year of the project is -$6,400.

Shannon's Irish Cookware Is Implementing a Project That Will Initially