Question

Nickolls Corporation has provided the following financial data: Cash $ 214,000 Accounts receivable, net $ 324,000...

Nickolls Corporation has provided the following financial data:

Cash $ 214,000
Accounts receivable, net $ 324,000
Total current assets $ 774,000
Total current liabilities $ 219,000

The company’s working capital is:

Multiple Choice

  • $1,228,000

  • $555,000

  • $819,000

  • $774,000

Homework Answers

Answer #1

Working capital represents the operating liquidity available to business. Working capital is calculated as total current assets minus total current liabilities. If the result is positive, then it has a positive working capital. If the result is negative, then it shows a deficit working capital.

In the above question,

Total current assets = $ 774,000

Total current liabilities = $ 219,000

Working capital = 774,000 - 219,000

Working capital = $ 555,000

Hence, option B is the correct answer.

SUMMARY:

In the question it gives the cash balance and accounts receivable. These both are included in total current assets. So we don't want to add these again.

So working capital is calculated as $ 555,000.

Hence, option B is the correct answer.

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