Question

Scrapping Products is implementing a project that will initially increase accounts payable by $3,000, increase inventory by $
Help Save & Exit Subr C -$2,100 o $2,100 o o –$2400 o S3,300
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Hello,
As per the details given in the question

Net Working Capital = Current Asset - Current liability
Current Asset -
Increase inventory by 1800 i.e. +1800
Decrease accounts receivable by 1200 i.e. -1200
Net CA = 600

Current Liability -
Increase accounts payable by - 3000 i.e. +3000
Net CL = 3000
NWC = CA - CL
NMC = 600 - 3000
NMC= -2400

I hope this clear your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

Do give a thumbs up if you find this helpful.

Add a comment
Know the answer?
Add Answer to:
Scrapping Products is implementing a project that will initially increase accounts payable by $3,000, increase inventory...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Glass Blowers, Inc. has a new project in mind that will increase accounts receivable by $11,000,...

    Glass Blowers, Inc. has a new project in mind that will increase accounts receivable by $11,000, decrease accounts payable by $6,000, increase fixed assets by $6,000, decrease inventory by $18,000 and decrease long-term debt by $10,000. What is the amount the firm should use as the initial cash flow attributable to net working capital when it analyzes this project? (Numbers in parentheses are negative) O ($41,000) $1000 O ($9000) O ($17,000) ($35,000) Question 2 5 pts Our firm's capital structure...

  • Judson Industries is considering a new project. The project will initially require $749,000 for n...

    Judson Industries is considering a new project. The project will initially require $749,000 for new fixed assets, $238,000 for additional inventory, and $25,000 for additional accounts receivable. Accounts payable is expected to increase by $70,001. The fixed assets will belong in a 30% CCA class. At the end of the project, in four years' time, the fixed assets can be sold for 40% of their original cost. The net working capital will return to its original level at the end...

  • As of December 31, 2013 1000 49,000 91000 Accounts Payable Accounts Receivable 44,000 Debt Inventory 48,000...

    As of December 31, 2013 1000 49,000 91000 Accounts Payable Accounts Receivable 44,000 Debt Inventory 48,000 Other Lisbites Property Plan 234000 Total Liabilities Eument Gross Accumulated Depreciation 78,000 Paid in Capital Property Plant & Equipment, Net 156,000 Retained Earnings 26,000 Total Equity Total Assets 365,000 Total Liabilities & Equity 60000 247 000 316,000 365,000 HUAWEI 7,200 2.000 (100) 1,000 600 Siam Traders Statement of Cash Flows January 1 to March 31, 2016 amounts in thousands Net Income Depreciation Decrease increase...

  • Help Save & Exit Submit 20 Jasper Metals is considering installing a new molding machine which...

    Help Save & Exit Submit 20 Jasper Metals is considering installing a new molding machine which is expected to produce operating cash flows of $56.000 per year for 7 years. At the beginning of the project, inventory will decrease by $16.800, accounts receivables will increase by $21.400, and accounts payable will increase by $15.300. At the end of the project. net working capital will return to the level it was prior to undertaking the new project. The initial cost of...

  • A company needs an increase in working capital of $50,000 in a project that will last...

    A company needs an increase in working capital of $50,000 in a project that will last 4 years. The company's tax rate is 30% 4 and its after-tax discount rate is 8%. Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using table. The present value of the release of the working capital at the end of the project is closest to: 02:-37.10 Multiple Choice $36,750 $15,000 $25,726 < Prev 40.10 Next> 5: Rhoads Corporation is considering...

  • 12. When using the Bardahl formula, an increase in accounts payable (while holding purch holding purchases and oper...

    12. When using the Bardahl formula, an increase in accounts payable (while holding purch holding purchases and operating expenses constant) has which of the following effects on the working capital requirements? A) decrease B) increase C) no effect D) increase, decrease, or no effect, depending on other factors 13. When computing the accumulated earnings tax, the dividends-paid deduction is not available for A) dividends paid during the tax year. B) throwback dividends. C) stock dividends. D) All of the above...

  • WACC, NPV, OCF and CFFA. The following is a set of financial statements for Acme Corporation....

    WACC, NPV, OCF and CFFA. The following is a set of financial statements for Acme Corporation. The target capital structure for Acme is 60% debt and 40% equity. The risk-free rate is 2%. The market risk premium is 5%. The beta of Acme against a relevant stock index is 0.8. The pre-tax cost of debt for Acme is 4%. Assume an effective corporation tax of 17%. Sales is expected to increase 15% per year from the new machine project. Working...

  • The target capital structure for Acme is 60% debt and 40% equity. The risk-free rate is 2%. The m...

    The target capital structure for Acme is 60% debt and 40% equity. The risk-free rate is 2%. The market risk premium is 5%. The beta of Acme against a relevant stock index is 0.8. The pre-tax cost of debt for Acme is 4%. Assume an effective corporation tax of 17%. Question 1 (a) Based on the given financial statements, calculate the following ratios for 2018. Explain the consequence if a calculated ratio is significantly lower than its corresponding industry average....

  • Exercise 2-12 a-b The T-accounts below summarize the ledger of Negrete Landscaping Company at the end...

    Exercise 2-12 a-b The T-accounts below summarize the ledger of Negrete Landscaping Company at the end of the first month of operations. 4/1 4/12 4/29 4/30 4/7 4/4 Cash No. 101 14,000 4/15 1,300 900 4/25 1,500 400 1,000 Accounts Receivable No. 112 3,000 4/29 400 Supplies No. 126 1,800 Accounts Payable No. 201 1,500 4/4 1,800 Unearned Service Revenue No. 209 4/30 1,000 Owner's Capital No. 301 4/1 14,000 Service Revenue No. 400 4/7 3,000 4/12 900 Salaries and...

  • This question has been posted before with various answers posted. Please provide your working notes so...

    This question has been posted before with various answers posted. Please provide your working notes so I can see how you arrived at your answers. Thanks in advance.   Smart Company is preparing its financial statements for the year ended June 30, 2017. The financial statements are complete except for the statement of cash flows. You have been asked to prepare a statement of cash flows for the year ended June 30, 2017. Download the excel spreadsheet found in the link...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT