This video provides an overview of Net Working Capital (NWC), discussing its fluctuations and recapture. It illustrates how changes in NWC affect cash flow, emphasizing the necessity of evaluating these changes for project assessments. Key Takeaways: Definition of NWC: Net Working Capital is computed as current assets minus current liabilities. Impact on Cash Flow:

• Increases in current assets can lead to decreased cash flow.

• Conversely, rising current liabilities can enhance cash flow.

Year-over-Year Analysis: Examining yearly changes in NWC uncovers cash flow patterns:

• A decrease indicates cash is freed up (positive cash inflow).

• An increase suggests that cash is being held up (negative cash outflow).

NWC Recapture: At a project's conclusion, NWC recapture involves reclaiming cash tied up in operations. This is calculated by aggregating all yearly changes in NWC and discounting future values. Initial Investment: The beginning investment in NWC is represented as a negative value in year zero. Importance of NWC: Grasping NWC and its variations is essential for analyzing financial statements and evaluating projects effectively.