Question

You are evaluating the balance sheet for Goodman Bees Corporation. From the balance sheet you find the following balances: cash and marketable securities = $750,000, accounts receivable = $1,500,000, inventory = $2,000,000, accrued wages and taxes = $560,000, accounts payable = $860,000, and notes payable = $660,000. Calculate Goodman Bees' net working capital. (Enter your answer in dollars not in millions. Round your answer to the nearest dollar amount.) Net working capital

Answer 1

Net working capital = Current assets - Current liabilities

Here,

Current assets = Cash & marketable securities + Accounts receivable + Inventory

Current assets = $750000 + $1500000 + $2000000 = $4250000

Current liabilities = Accrued wages & taxes + Accounts payable + Notes payable

Current liabilities = $560000 + $860000 + $660000 = $2080000

Now, putting the values of current assets and current liabilities in the net working capital equation, we get,

Net working capital = $4250000 - $2080000

Net working capital = $2170000