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We always assume that the working capital results in a cash outflow at
the time it is needed, that the requirement remains for the life of the investment, but that it is
released (and therefore results in a cash inflow) at the end of the project.Sir, Can You Please Explain This Statement? I Still Didn’t Get What Does It Mean That Working Capital Is Released At The End Of The Period Resulting In Inflow.
Why have you not watched my free lectures on this? You really cannot expect me to type out all my lectures here 🙂
Working capital is needed during the life of the project, but at the end of the project it is no longer needed and is therefore recovered – there is an inflow at the end of the project of the total of all the working capital outflows during the life.
(Unless the examiner makes it clear that the production will continue with the purchase of a new machine, in which case the working capital will still be needed and will not be recovered).
I explain all of this, with examples, in my free lectures.
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