Question

Assume that Icon Co. 2014 current assets totaled for $80,000, they paid out $32,000 in the...

Assume that Icon Co. 2014 current assets totaled for $80,000, they paid out $32,000 in the form of account payable and $8,000 as accruals and $10,000 in notes payable and in 2015 they had a NWC of $40,000. Calculate the change in net working capital.
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Answer #1

Answer-

Given

Icon Co. 2014

Current assets = $ 80000
Accounts payable = $ 32000
Accruals = $ 8000
Notes payable = $ 10000

Net Working Capital (NWC) in 2014 = Current Assets - Current liabilities

Current liabilities = Accounts payable + Accruals + Notes payable = $ 32000 + $ 8000 + $ 10000 = $ 50000

Net Working Capital (NWC) in 2014 = $ 80000 - $ 50000 = $ 30000

Icon Co. 2015

Net Working Capital ( NWC) in 2015 = $ 40000

Change in Net Working Capital ( NWC) from 2014 tto 2015 = $ 40000 - $ 30000 = $ 10000

Net Working Capital in 2015 has increased by $ 10000

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