An increase in net working capital required at the beginning of an expansion project must be considered to be
A)a cash inflow.
B)a reallocation of assets.
C)a cash outflow.
D)None of the above

Question

Quizplus · Accepted Answer

An increase in net working capital required at the beginning of an expansion project is a cash outflow because it represents a need for additional funds to finance the increased level of current assets required to support the project. Current assets, such as inventory and accounts receivable, require cash to fund their acquisition, and an increase in net working capital means that more cash is required upfront.

An Increase in Net Working Capital Required at the Beginning