The project lasts 3 years. Operating NWC equals 10.00% of annual sales, invested at each year-end. Initial NWC is zero and all NWC is released at completion; any final-year funding and release net to the recovery of the preceding balance.
| Year | 1 | 2 | 3 |
|---|---|---|---|
| Sales | 1000 | 2000 | 3000 |
| Year | 1 | 2 | 3 |
|---|---|---|---|
| Closing NWC | 100.00 | 200.00 | 0.00 |
| Cash flow from NWC | -100.00 | -100.00 | 200.00 |
An increase in working capital uses cash; final recovery releases cash.
The project lasts 5 years. Operating NWC equals 12.00% of annual sales, invested at each year-end. Initial NWC is zero and all NWC is released at completion; any final-year funding and release net to the recovery of the preceding balance.
| Year | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|
| Sales | 10000 | 11000 | 12100 | 12100 | 12100 |
| Year | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|
| Closing NWC | 1,200.00 | 1,320.00 | 1,452.00 | 1,452.00 | 0.00 |
| Cash flow from NWC | -1,200.00 | -120.00 | -132.00 | -0.00 | 1,452.00 |
An increase in working capital uses cash; final recovery releases cash.