Question

Suppose that Linksys is considering the development of a wireless home networking​ appliance, called​ HomeNet, that will provide both the hardware and the software necessary to run an entire home from any Internet connection.​ Linksys's receivables are

15.8 %15.8%

of sales and its payables are

15.7 %15.7%

of COGS. Forecast the required investment in net working capital for HomeNet assuming that sales and cost of goods sold​ (COGS) will be as​ follows:

Year   0   1   2   3   4
Sales       $23,330   $26,705   $23,841   $8,651
COGS       $9,431   $10,796   $9,638   $3,497

The required investment in net working capital for year 0 is

Answer 1

Working capital = Current Assets - Current Liabilities
=accounts receivables - accounts payable
Change in working capital = Working capital this year - working capital last year
	0	1	2	3	4
Sales		23330	26705	23841	8651
Cost of Goods sold		9431	10796	9638	3497
Accounts receivables		3686.14	4219.39	3766.878	1366.858
Accounts payable		1480.667	1694.972	1513.166	549.029
Working Capital		2205.473	2524.418	2253.712	817.829
Change in working capital		2205.473	318.945	-270.706	-1435.883
Note: Negative amount denotes release