Question

The assets of the Bermuda Corporation consist exclusively of Net Property, Plant and Equipment (PPE), and...

  • The assets of the Bermuda Corporation consist exclusively of Net Property, Plant and Equipment (PPE), and Current Assets.
  • The firm has the total Assets of $50,000, while its Gross PPE equals $40,000 with the Depreciation of $10,000.
  • It has the Notes Payable of $5,000, in addition to the Long-Term Debt of $15,000, and the Common Equity of $25,000.
  • The company finances its needs with debt and common equity and does not have preferred stock on its balance sheet.
  1. Calculate the amount of total liabilities and equity on the firm’s balance sheet.                                                             (1 point)

  1. Calculate the balance of current assetson the firm’s balance sheet.                                                                                 (1 point)

  1. Calculate the balance of current liabilitieson the firm’s balance sheet.                                                                           (1 point)

  1. Calculate the amount of accounts payable and accrualson the firm’s balance sheet (provided they are listed under one account).                                                                                                                                                                                                                (1 point)

Calculate the firm’s net operating working capital.   

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Answer #1

It is assumed that:

(1 ): Notes payable is within one year and a current liability. Being a debt, non operating liability, it is not considered for calculating operating working capital.

(2 ): All current assets are operating current assets (comprising cash, inventory and accounts receivable).

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