Investments in working capital, just like investments in plant and equipment, result in cash inflows at time zero.

Question

Quizplus · Accepted Answer

Investments in working capital may result in cash outflows at time zero because they involve an increase in current assets such as inventory, accounts receivables, and cash that may require upfront payments. These investments can only generate cash inflows over time as the working capital is used to generate revenues and profits.

Investments in Working Capital, Just Like Investments in Plant and Equipment