Question

What was its net operating working capital?

please show your work; each step if possible on excel, hand write is okay if you do nor have access to EXCEL.

H&M balance sheet showed

total current assets of $2,250, all of which were required operations.

Its current liabilities consisted of $575 of accounts payable,$300 of 6% short term notes payable to the bank, and $145 of accruec wages and taxes.

Answer 1

Net Operating Working Capital (NOWC)

Net Operating Working Capital (NOWC) is the excess amount of operating current assets over its operating current liabilities.

Net Operating Working Capital (NOWC) = Operating Current Assets – Operating Current Liabilities

Here, we’ve Operating Current Assets = $2,250 (Give)

Operating Current Liabilities = Accounts Payables + Accrued Wages & Taxes

= $575 + $145

= $720 (Note Payable is not form the part of Operating Current Liabilities)

Therefore, the Net Operating Working Capital (NOWC) is the excess amount of operating current assets over its operating current liabilities.

= $2,250 - $720

= $1,530

“Hence, the Net Operating Working Capital (NOWC) would be $1,530”