Which of the following is true about initial working-capital investment?
a) Initial investments in plant and equipment are never accompanied by additional investments in working capital.
b) Initial investments exclude cash assets.
c) Additional investments in working-capital investments are never in the form of a current asset.
d) Initial investments in plant and equipment are usually accompanied by additional investments in working capital.
e) Investments in initial machines occur at the end of the product's life.
Capital For Business
When we want to start a business, we need capital. Capital refers to the initial investment in assets for the business. We may also need to invest in inventories, receivables and other current assets. The investment in current assets is called working capital.
Answer and Explanation: 1
- Initial investments in plant and equipment may be accompanied by additional investment in working capital as new machine may require higher inventory...
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fromChapter 8 / Lesson 11
This lesson explains what working capital is, how it is used in a business, and why businesses need working capital to stay functional. We'll also look at the formula used to calculate working capital.