A little confused here. Company will invest in net working capital at the beginning. But how can the company can recapture its investment in net working capital at the project termination? Thanks in advance.
You need a given level on inventory to get the business running. Right? So, you buy inventory to start with, and you leave it on the shelves of your store (for instance), hoping that customers will grad some and buy it. 10 years later, you are rich and you close the business so that you can live the good life in the Dominican Republic, so you continue to sell your stuff, but you don’t replenish your inventory. And guess what? The value of the inventory that was sitting on the shelves comes back to you as the shelves empty themselves. Usually (during the years of operation) you would just use that money to buy more inventory, so you wouldn’t have a cash flow. But now, you just keep the money and you can play the sugar daddy in the Caribean (i.e. you recapture your investment in working capital at the project termination)
agree with post above remember working capital is current assets- current liabilities and represents fairly liquid ‘investments’ in comparison to long term assets