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Dear Tutor,
I have noticed that the examiner has included the recover of the WC in year 3 and 4. Would it be acceptable if we consider the whole amount at the end of year 3?
No, it would not be acceptable.
It is because the working capital at the start of each year has to be 10% of the sales revenue for the year. So every year the working capital needs adjusting – either higher or lower – to become 10%.
It is only in the final year that the final amount of working capital is recovered.
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