Your firm reported Cash Flow from Assets of $211,000 with Operating Cash Flow of $235,000 and Capital Spending of $122,000. What was your firms Change in Net Working Capital for the year?
A. -$98,000
B. $146,000
C. -$146,000
D. $98,000
We can calculate the change in Net Working Capital by the following formula,
Cash flow from assets = Operating cash flows – Change in NWC – Net capital spending
Cash flow from assets = $211,000
Operating Cash Flow = $235,000
Capital Spending = $122,000
Putting these values in the above equation we get,
211,000 = 235,000 - Change in NWC - 122,000
NWC = 235,000 - 122,000 - 211,000
NWC = -$98,000
Hence the change in net working capital is -$98,000 and the answer is option a)
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