Could someone explain what the inventory investment outlay is needed for capital projects? What do they mean when there is an inventory outlay for the capital project? More specifically, why does the terminal value reverse the inventory and accounts receieveable outlay that occur at the beginning of the project?
even though you may already have building materials, etc. left over from a previous project and may be in the business of manufacturing tires all along, and are now having to get into a brand new project of manufacturing tires for your client X - you set aside the money initially for Inventory - to FULLY account for all expenses related the project.
Similarly when you close out the project - the funds initially added to the “fund” for inventory / material / equipment is wound out again as a method to fully account for the project accurately.