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Changes in Net Operating Working Capital Do Not Need to Be

question 67

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Changes in net operating working capital do not need to be considered in capital budgeting cash flow analysis as long as the nominal (undiscounted) values of the changes are identical in each time period.


Definitions:

Operations

Activities and tasks involved in the day-to-day running of a business for the purpose of producing value for the stakeholders.

Process Costing

An accounting method used to evaluate the cost of a production process by assigning costs to sections of the manufacturing process.

Job Order System

A method of assigning costs to specific production batches or jobs and is used in manufacturing industries where customization or unique products are produced.

Cost Of Production Report

A document that details the total cost and production quantities of a product or products over a specified period of time.

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