Question

For project A, the cash flow effect from the change in net working capital is expected to be -700 dollars at time 2 and the level of net working capital is expected to be 1,400 dollars at time 1. What is the level of current liabilities for project A expected to be at time 2 if the level of current assets for project A is expected to be 4,400 dollars at time 2?

For project A, the cash flow effect from the change in net working capital is expected to be -700 dollars at time 2 and the level of net working capital is expected to be 2,100 dollars at time 2. What is the level of current assets for project A expected to be at time 1 if the level of current liabilities for project A is expected to be 3,400 dollars at time 1?

Answer 1

1.
Working capital at time 2=Working capital at time 1-Cash flow effect=1400-(-700)=2100

Working capital at time 2=Current Assets at time 2-Current Liabilities at time 2

=>4400-2100=Current Assets at time 2
=>Current Assets at time 2=2300

2.
Working capital at time 1=Working capital at time 2+Cash flow effect=2100+(-700)=1400

Working capital at time 1=Current Assets at time 1-Current Liabilities at time 1

=>1400+3400=Current Assets at time 1
=>Current Assets at time 1=4800