Question

You are given the following information on Huntington Ingalls Industries, Inc. (HII) presented as of the...

You are given the following information on Huntington Ingalls Industries, Inc. (HII) presented as of the end of each year:

2017

2018

Accounts Receivable

$1,164,000

$1,188,000

Inventory

$210,000

$183,000

Accounts Payable

$1,087,000

$1,155,000

A. Find the change in working capital in 2018.

B. What is the cash flow associated with the change in working capital

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Answer #1

(a)-Change in working capital in 2018.

The working capital is calculated by using the following formula

Working Capital = Total Current Assets – Total Current Liabilities

Working Capital for 2017 = Total Current Assets – Total Current Liabilities

= [Accounts Receivables + Inventory] – Accounts Payable

= [$11,64,000 + $210,000] - $10,87,000

= $13,74,000 - $10,87,000

= $287,000

Working Capital for 2018 = Total Current Assets – Total Current Liabilities

= [Accounts Receivables + Inventory] – Accounts Payable

= [$11,88,000 + $183,000] - $11,55,000

= $13,71,000 - $11,55,000

= $216,000

Therefore, the Change in working capital in 2018 would be -$71,000 (Negative)

[$216,000 - $287,000]

(b)-The cash flow associated with the change in working capital

The cash flow associated with the change in working capital would be -$71,000

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