In evaluating the initial investment for a capital budgeting project, ________.
A) an increase in net working capital is considered a cash inflow
B) a decrease in net working capital is considered a cash outflow
C) an increase in net working capital is considered a cash outflow
D) net working capital does not have to be considered

Question

Quizplus · Accepted Answer

An increase in net working capital is considered a cash outflow because it represents additional funds tied up in inventory and receivables, reducing available cash.

In Evaluating the Initial Investment for a Capital Budgeting Project