Changes in net working capital should not be reflected in a capital budgeting cash flow analysis because capital budgeting relates to fixed assets, not working capital.

Question

Quizplus · Accepted Answer

Changes in net working capital should be reflected in a capital budgeting cash flow analysis because they affect cash flows related to the operating activities of the project. Working capital is an important part of the cash flow analysis and can impact the overall profitability of the project.

Changes in Net Working Capital Should Not Be Reflected in a Capital