Question

(Working with the balance​ sheet)  The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heirloom tomato plants are preferred by many growers for their superior flavor. At the end of the most recent year the firm had current assets of

$ 51 comma 900$51,900​,

net fixed assets of

$ 249 comma 600$249,600​,

current liabilities of

$ 31 comma 900$31,900​,

and​ long-term debt of

$ 100 comma 600$100,600.

a.  Calculate​ Caraway's stockholders' equity.

b. What is the​ firm's net working​ capital?

c.  If​ Caraway's current liabilities consist of

$ 21 comma 100$21,100

in accounts payable and

$ 10 comma 800$10,800

in​ short-term debt​ (notes payable), what is the​ firm's net working​ capital?

a.  Calculate​ Caraway's stockholders' equity.

Answer 1

a). Total Assets = Total Liabilities + Stockholders' Equity

Current Assets + Net Fixed Assets = Current Liabilities + Long-term Debt + Stockholders' Equity

$51,900 + $249,600 = $31,900 + $100,600 + Stockholders' Equity

$301,500 = $132,500 + Stockholders' Equity

Stockholders' Equity = $301,500 - $132,500 = $169,000

b). Net Working Capital = Current Assets - Current Liabilities = $51,900 - $31,900 = $20,000

c). The firm's net working capital will not change, i.e., NWC = $20,000