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Due to the adoption of a just in time assembly line system, NWC is expected to decrease. Inventory is expected to decrease from $254600 to $143072 while accounts payable will also decrease by $26648. What is the cash flow impact for the change in net working capital to be included in the initial investment

Respuesta :

Answer:

$84,880

Explanation:

Since there is a decrease in inventory from $254,600 to $143,072 i.e $111,528 and the account payable is also decreased by $26,648

So, there is an increase in cash flow due to the change in net working capital of

= Decrease in inventory - decrease in account payable

=  $111,528 - $26,648

= $84,880

Hence, the cash flow impact is of $84,880 i.e to be included in the initial investment

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