Question

Wu Systems has the following balance sheet. Assume that all current assets are used in operations....

Wu Systems has the following balance sheet. Assume that all current assets are used in operations. How much net operating working capital does the firm have?

Cash $ 100 Accounts payable $ 200
Accounts receivable 650 Accruals 110
Inventory 550 Notes payable 590
Current assets $ 1,300 Current liabilities $ 900
Net fixed assets $ 1,000 Long-term debt 600
Common equity 300
Retained earnings 500
Total assets $ 2,300 Total liab. & equity $ 2,300
a. $1,010
b. $911
c. $990
d. $782
e. $1,168
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Answer #1

Net operating working capital:

= Operating current assets – Operating current liabilities

= $1,300-($200+$110)

= $1,300-$310

= $990

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