Question

The Green Carpet has current liabilities of $72,100 and accounts receivable of $107,800. The firm has total assets of $443,500 and net fixed assets of $323,700. The owners' equity has a book value of $191,400. What is the amount of the net working capital?

Answer 1

Answer:

The answer is: $47,700

Explanation:

To determine net working capital we use the following formula:

Net working capital = total current assets - total current liabilities

• Current assets: assets that can be converted to cash within a on year period (e.g. cash, account receivables, inventory, etc.)
• Current liabilities: debts that should be paid within a one year period (e.g. accounts payable, wages, taxes, etc.)

Net working capital = $119,800 (current assets = total assets - net fixed assets) - $72,100 (current liabilities)

Net working capital = $47,700