Kay's Nautique is considering a project which will require additional inventory of €128,000 and will also increase trade payables by €45,000 as suppliers are willing to finance part of these purchases.Trade receivables are currently €80,000 and are expected to increase by 10% if this project is accepted.What is the initial project cash flow needed for net working capital?

Question

Quizplus · Accepted Answer

The initial project cash flow needed for net working capital will be the total increase in current assets minus the increase in current liabilities.

Increase in trade receivables = 10% x €80,000 = €8,000 
Increase in inventory = €128,000 
Increase in trade payables = €45,000

Therefore, the initial project cash flow needed for net working capital = (€128,000 + €8,000) - €45,000 = €91,000

Option B is the correct answer.

Kay's Nautique Is Considering a Project Which Will Require Additional