A company is launching a new sales initiative and expects sales of $200,000 during the first year, and the gross profit margin to be 18%. To prepare for this, they plan to acquire 90 days worth of inventory. Their vendor will allow 30 days to pay its invoices. The company plans to sell only on account to its customers, so sales will be entirely credit based, and the average invoice is expected to take 30 days to collect. What amount of net working capital should be included in the initial investment?

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Calculating Net Working Capital for New Sales Initiative Heres how to calculate the ne... View the full answer