If a ﬁrm wishes to recapture 100% of its net working capital investment in a project, the ﬁrm will
have to pay all of the project's suppliers in full.

Question

Quizplus · Accepted Answer

If a firm wishes to recapture 100% of its net working capital investment in a project, it will have to pay all of the project's suppliers in full. This is because net working capital is the difference between a firm's current assets and current liabilities. When a firm invests in a project, it typically increases its current assets (e.g., inventory, accounts receivable) and current liabilities (e.g., accounts payable). If the firm wishes to recapture 100% of its net working capital investment, it will need to collect all of its accounts receivable and pay off all of its accounts payable.

If a ﬁRm Wishes to Recapture 100% of Its Net