Which of the following statements regarding investment in working capital is incorrect?
A) Investment in working capital, unlike investment in plant and equipment, represents a positive cash flow.
B) The cash flow is measured by the change in working capital, not the level of working capital.
C) The working capital may change during the life of the project.
D) Working capital is recovered at the end of the project.

Question

Quizplus · Accepted Answer

Investment in working capital represents a negative cash flow, as it requires the use of cash to finance current assets such as inventory, accounts receivable, and prepaid expenses. The statement that investment in working capital represents a positive cash flow is incorrect.

Which of the Following Statements Regarding Investment in Working Capital