Explain why working capital is "recaptured" when a project draws to a close
What will be an ideal response?
Answer: Project working capital consists of current assets and liabilities that are required to operate a project. These could be inventory items that are "used up" as the products are manufactured and sold, or they could be changes in accounts receivable to accommodate the change in sales as a result of undertaking a new project. But as the project comes to a close, so does the need for the incremental working capital. Inventories and accounts receivable return to prior levels and miscellaneous production aids are not reordered. Thus, working capital is "recaptured."
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