The change in net working capital associated with a capital project may actually result in a decrease in the firm's current funding requirement, which frees up cash flows for investment.

Question

Quizplus · Accepted Answer

A decrease in net working capital would mean that the firm has less current assets tied up in operations, which could lead to a decrease in the firm's current funding requirement. This would free up cash flows for investment in other projects.

The Change in Net Working Capital Associated with a Capital