How & why does working capital affect incremental cash flow, Financial Management

Assignment Help:

How and why does working capital affect the incremental cash flow estimation for a proposed large capital budgeting project?  Explain.

Several large projects require additional working capital.  This investment in additional working capital develops into part of the initial investment.  This investment is recovered in the last part of the project's life.  There may be some impulsive increase in current liabilities associated with a project however the change in net working capital, if any, is probable to be a positive value requiring an increase in the initial investment of that amount.

 


Related Discussions:- How & why does working capital affect incremental cash flow

Determine the key factor affecting financing costs, Determine The key facto...

Determine The key factor affecting financing Costs Because cost of capital is measured under the assumption that both firm's asset structure and its capital (financial) structu

Services of an overseas factor, Several overseas factors are subsidiaries o...

Several overseas factors are subsidiaries of UK banks or their agents who offer facilities to companies with export credit sales usually of above £0.25m. Overseas factors carry out

Theories of the term structure, There are two important term structur...

There are two important term structure theories related to the shapes of the yield curve. First is the Expectations Theory and the second is Market Segmentations

Sustainable growth rate, You are given the following information for Clapto...

You are given the following information for Clapton Guitars, Inc. Profit margin 6.3% Total Asset turnover 1.6 Total debt ratio 0.44 Payout ratio 35% Calculat

Benefits of going private company, Benefits of Going private company A...

Benefits of Going private company A public company has its shares purchased by a small group of people and ceases to be listed on stock exchange. This has many benefits includ

Importance of the cost of capital, Q. Importance of the cost of capital? ...

Q. Importance of the cost of capital? 1. Evaluating financial performance: the actual profitability of the project is compared to the projected overall cost of capital and th

Define condition for fixed-for-floating interest rate swap, What is the ess...

What is the essential condition for a fixed-for-floating interest rate swap to be possible? For a fixed-for-floating interest rate swap to be feasible it is essential for a quali

Walters model, A Ltd sells goods at Rs.10.P.U. Its variable cost Rs.7.P.U a...

A Ltd sells goods at Rs.10.P.U. Its variable cost Rs.7.P.U and fixed cost amount to Rs.1,70,000 it finances all its assets by equity funds. It pays 40% tax on its income. Z Ltd is

When they analyze pro forma financial statements, What do financial manager...

What do financial managers look for when they analyze pro forma financial statements? After the pro forma financial statements are finished, financial managers examine the

What are the negative consequences of a company holding, What are the negat...

What are the negative consequences of a company holding too much cash? A company holding in excess of cash would be giving up the opportunity to invest more in income producing

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd