JohnBoy Industries has a cash balance of $54,000, accounts payable of $134,000, inventory of $184,000, accounts receivable of $219,000, notes payable of $129,000, and accrued wages and taxes of $41,500. How much net working capital does the firm need to fund?

Answer:Net working capital = $152,500

Explanation:

Net working capital = CA - CL

Where CA = Current Assets = Cash + Inventory + Accounts Receivable

and CL = Current Liabilities = Account payable + Notes payable + accrued wages and taxes

CA=$54, 000 + $184,000 + $ 219,000 = $457,000

Current liabilities = Account payable + Notes payable + accrued wages and taxes

CL = $134,000 + $129,000 + $41,500 = $304,500

Net working capital = Current assets - Current liabilities

Net working capital = $457,000 - $304,500 = $152,500

Net working capital = $152,500