Question

For project A, the cash flow effect from the change in net working capital is expected to be -100 dollars at time 2 and the level of net working capital is expected to be 1,600 dollars at time 1. What is the level of current liabilities for project A expected to be at time 2 if the level of current assets for project A is expected to be 2,900 dollars at time 2?

For project A, the cash flow effect from the change in net working capital is expected to be -300 dollars at time 2 and the level of net working capital is expected to be 1,900 dollars at time 1. What is the level of current assets for project A expected to be at time 2 if the level of current liabilities for project A is expected to be 1,700 dollars at time 2?

Answer 1

1.
Working capital at time 2=Working capital at time 1-Cash flow effect=1600-(-100)=1700

Working capital at time 2=Current Assets at time 2-Current Liabilities at time 2

=>2900-1700=Current Assets at time 2
=>Current Assets at time 2=1200

2.
Working capital at time 2=Working capital at time 1-Cash flow effect=1900-(-300)=2200

Working capital at time 2=Current Assets at time 2-Current Liabilities at time 2

=>2200+1700=Current Liabilities at time 2
=>Current Liabilities at time 2=3900