Question

The 2008 balance sheet of Saddle Creek, Inc., showed current assets of $1,490 and current liabilities of $980. The 2009 balance sheet showed current assets of $1,640 and current liabilities of $1,040. What was the company's 2009 change in net working capital, or NWC?

Answer 1

The change in net working capital is computed as shown below:

= Net working capital in 2009 - Net working capital in 2008

The net working capital in 2009 is computed as follows:

= Current Assets - Current Liabilities

= $ 1,640 - $ 1,040

= $ 600

The net working capital in 2008 is computed as follows:

= Current Assets - Current Liabilities

= $ 1,490 - $ 980

= $ 510

So, the company's 2009 change in net working capital will be as follows:

= $ 600 - $ 510

= $ 90

Feel free to ask in case of any query relating to this question