Question

Balance Sheet You are evaluating the balance sheet for Cypress Corporation. From the balance sheet you find the following balances: Cash and marketable securities = $520,000, Accounts receivable = $720,000, Inventory = $420,000, Accrued wages and taxes = $42,000, Accounts payable = $120,000, and Notes payable = $920,000. What is Cypress's net working capital?​

Answer 1

Solution:
	Cypress's net working capital = $578,000
Working Notes:
	Net Working Capital = Current assets - Current liabilities
	Current assets
	Accounts receivable	$720,000
	Inventory	$420,000
	Cash and marketable securities	$520,000
	Total Current assets	$1,660,000
	Current liabilities
	Accrued wages and taxes	42,000
	Accounts payable	120,000
	Notes payable	920,000
	Total Current liabilities	1,082,000
	Net Working Capital = Current assets - Current liabilities
	=$1,660,000 - $1,082,000
	=$578,000
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