Question

A firm had current assets of $50,000, net fixed assets of $250,000, current liabilities of $ 30,000, and long-term debt of $100,000

1. What is the firm’s stockholder equity?
2. What is the net working capital?
3. If its current liabilities consist of $20,000 in accounts payable and $10,000 in short-term debt (notes payable), what is the firm’s net working capital?

Your submission must include and indicate clearly which EQUATIONS from the textbook that you have used, and must show steps in details that lead to your answers.

Answer 1

Answer of Part a:

Total Assets = Current Assets + Net Fixed Assets
Total Assets = $50,000 + $250,000
Total Assets = $300,000

Total Liabilities = Current Liabilities + long term Debt
Total Liabilities = $30,000 + $100,000
Total Liabilities = $130,000

Stockholders Equity = Total Assets – Total Liabilities
Stockholders Equity = $300,000 - $130,000
Stockholders Equity = $170,000

Answer of Part b:

Net Working Capital = Current Assets – Current Liabilities
Net Working Capital = $50,000 - $30,000
Net Working Capital = $20,000

Answer of Part c:

Net Working Capital = Current Assets – Current Liabilities
Net Working Capital = $50,000 – ($20,000 + $10,000)
Net Working Capital = $50,000 - $30,000
Net Working Capital = $20,000