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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › investment decision
Hi,
It is not clear to me, is the working capital a relevant cash flow item for the investment decision? The book says that it will be repaid at the end (inventory A/R), so we do not have to calculate with it? Seems as though it only gives a time delay, but not a total difference.
In all, do we have to add the working capital elements of the investment to the decision calculation or not?
Thanks
Working capital is a cash flow and is therefore relevant.
We usually assume that it is recovered (i.e. is an inflow) at the end of the project.
Can I suggest that you watch my free lecture here on relevant cash flows for DCF?