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JohnBoy Industries has a cash balance of $42,000, accounts payable of $122,000, inventory of $172,000, accounts...

JohnBoy Industries has a cash balance of $42,000, accounts payable of $122,000, inventory of $172,000, accounts receivable of $207,000, notes payable of $117,000, and accrued wages and taxes of $35,500. How much net working capital does the firm need to fund?

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Answer #1


Net working capital = Current assets – Current liabilities

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Current assets = Cash + Inventory + Account receivable

Current assets = 42000 + 172000 + 207000

Current assets = $421,000

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Current liabilities = Account payable + Notes payable + accrued wages and taxes

Current liabilities = 122000 + 117000 + 35500

Current liabilities = $274,500

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Net working capital = Current assets – Current liabilities

Net working capital = 421,000 – 274500

Net working capital = $146,500

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