Question

For the next two questions suppose the following balance sheet: Cash $20 Accounts payable $30 Short-term...

For the next two questions suppose the following balance sheet:

Cash $20 Accounts payable $30
Short-term inevstments 20 Accruals 50
Accounts receivable 50 Notes payable 10
Inventory 60      Current liabilities 100
     Current assets 160 Long-term debt 70
Net fixed assets 100 Common equity 30
Retained earnings 60
Total assets 250 Total liab. & equity $250


What is its total net operating working capital?

$40

$50

$60

$130

$160

What is its total net operating capital?

$140

$150

$160

$230

$260
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Homework Answers

Answer #1

Operating Current Assets = Cash + Accounts Receivable + Inventory
Operating Current Assets = $20 + $50 + $60
Operating Current Assets = $130

Operating Current Liabilities = Accounts Payable + Accruals
Operating Current Liabilities = $30 + $50
Operating Current Liabilities = $80

Net Operating Working Capital = Operating Current Assets - Operating Current Liabilities
Net Operating Working Capital = $130 - $80
Net Operating Working Capital = $50

Net Operating Capital = Net Operating Working Capital + Net Fixed Assets
Net Operating Capital = $50 + $100
Net Operating Capital = $150

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