Changes in Net Operating Working Capital Should Not Be Reflected

question 40

True/False

Changes in net operating working capital should not be reflected in a capital budgeting cash flow analysis because capital budgeting relates to fixed assets,not working capital.

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Definitions:

Surpluses

The quantity of goods that remains when a producer has more goods than it is able to sell at the current price.

Shortages

Occurrences when the demand for a product or service exceeds its supply in a market, often leading to higher prices and unmet consumer needs.

Equilibrium Price

The market price at which the quantity of a good supplied equals the quantity demanded, leading to a stable market situation.

Government Intervention

Actions taken by a government to affect the economy, which can include regulations, subsidies, tariffs, and more.