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8 July, 09:38

Mike's Fish Market is implementing a project that will initially increase accounts payable by $6,100, increase inventory by $2,800, and decrease accounts receivable by $1,300. All net working capital will be recouped when the project terminates. What is the cash flow related to the net working capital for the last year of the project?

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  1. 8 July, 10:03
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    The net working capital is - $4600.

    Explanation:

    Use the below formula to calculate net working capital:

    Net working capital = Total current assets - Total current liability

    Total current liability = $6100

    Total current asset = increase in inventory - decrease in account reciveable

    Total current asset = $2800 - 1300

    = $1500

    Now, Net working capital = Total current assets - Total current liability

    Net working capital = $1500 - $6100

    = - $4600

    Thus, net working capital is - $4600.
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