Determine the Change in Net Working Capital That Appears Warranted

question 94

Essay

Determine the change in net working capital that appears warranted for the following proposed project: Inventory levels will increase 20% from their current value of $500,000; cash will increase by $25,000; wage accruals will increase by $60,000; machinery will increase by $75,000; accounts receivable-because of a new collection system-will increase by only $15,000; accounts payable will increase by $45,000. What happens to net working capital at the end of the project's life?

---

Definitions:

Primary Group

A group with strong emotional ties and bonds that endure over time. This type of group tends to be more informal and intimate than other groups that individuals belong to. See also Secondary group.

Secondary Group

A group that is formal and impersonal, often organized around instrumental goals. See also Primary group.

Ethnocentrism

In intergroup relations, the tendency to regard one’s own group as the center of everything and to evaluate other groups in reference to it; the tendency to regard one’s in-group as superior to all out-groups.

Goal Isomorphism

The concept of having converging or similar objectives across different individuals, groups, or systems.