Your firm has total assets of $79,600; fixed assets of $43,100; long term debt of $29,200 and short term debt of $19,900. what is the amount of net working capital?

Question

Business

Jose Schneider

4 February, 11:54

Your firm has total assets of $79,600; fixed assets of $43,100; long term debt of $29,200 and short term debt of $19,900. what is the amount of net working capital?

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Answers (1)

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Hamza Conway · Answer 1

The formula for net working capital is current assets - current liabilities

In the problem, you can solve the net working capital by getting the current assets. This is computed by total assets - fixed assets. Since fixed assets is not part of currents assets. Current assets include cash and cash equivalents, accounts receivable, inventory, securities, prepaid expenses and other liquid assets that are readily available to be converted into cash. To the get the current liabilities, you should only get the short term debt. Since current liabilities comprises only obligations that are due in one year like accounts payable, accrued liabilities and short term debts.

Solution:

NWC = CA - CL

= ($79,600 - $43,100) - $19,900

= $36,500 - $19,900

= $16,600