Question

Your firm reported Cash Flow from Assets of $211,000 with Operating Cash Flow of $235,000 and...

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

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Homework Answers

Answer #1

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)

If you have any doubts please let me know in the comments. Please give a positive rating if the answer is helpful to you. Thanks.

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