Question: Great Northern Manufacturing presently has net working capital of 100 000
Great Northern Manufacturing presently has net working capital of $100,000 and sales of $150,000. It is considering entering into a new project that would increase next year’s sales by $7,500. The project would result in a decrease in the average collection period of receivables (or days receivables) by two days (from 32 days to 30 days), but would have no impact on the other working capital items. Estimate the accounts receivable before and after the firm undertakes the project. Estimate the change in net working capital that will result for this firm if it undertakes the project.
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