Question

VERSION: A have? South Eastern Inc. has the following balance sheet. How much net operating working capital does the firm nwc-CA-Cl Assets Liabilities and Owner's Equity Cash $ 100 Accounts payable $ 200 Accounts receivable 650 Accruals 350 Inventory 550 Notes payable 350 >$1,300 Current assets Current liabilities > $ 900 600 1,000 Long-term debt Net fixed assets Common equity 300 Retained earnings $2,300 Total liabilities & equity $2.300 Total assets 500

Answer 1

Net operating working capital = Current operating assets - Current operating liabilities

Where, Current operating assets include cash, accounts receivable and inventories

Current operating liabilities include account payable and accrued expenses. Note payable is not included in current operating liabilities because any current loans or interest bearing liabilities are not part of current operating liabilities.

Therefore,

Net operating working capital = ($100 + $650 + $550) – ($200 + $350)

= $1300 - $550

= $750

Therefore Net operating working capital is $750.