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1 year ago

Define working capital. How is working capital computed?

1 answer:

8 0

Working capital is calculated by subtracting current liabilities from current assets shown on a company's balance sheet. Current assets include cash, accounts receivable and inventories. Current liabilities include accounts payable, taxes, wages and accrued interest.

Working capital is calculated by subtracting current assets from a company's current liabilities. For example, if a company has current assets of $100,000 and current liabilities of $80,000, its working capital is $20,000.

To calculate the working capital requirement, the following formula can be used: Working Capital (WC) = Current Assets (CA) – Current Assets (CL).

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Markets always allocate resources in ways that meet ideal economic efficiency.

Virty [35]

Answer:

False. Markets can sometimes fail to reach efficiencies when there are externalities, public goods, monopoly, or serious information asymmetries

Explanation:

Invisible hand (effective allocation of resources in a laissez faire economy) sometimes works because when market function effectively and send correct price as signal of values (to society) to producers.

However, when goods can't be traded on markets (public goods) or its values are not correctly reflected on markets (externalities, information asymmetries) or competition is not ensured (monopoly), markets cannot ensure effective allocation of resources.

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3 years ago

Zhang Company reported Cost of goods sold of $835,000, beginning Inventory of $37,200 and ending Inventory of $46,300. The avera

Lilit [14]

Answer:

Average inventory= $41,750

Explanation:

Giving the following information:

Beginning Inventory= $37,200

Ending Inventory= $46,300

<u>To calculate the average inventory, we need to use the following formula:</u>

Average inventory= (beginning inventory + ending inventory) / 2

Average inventory= (37,200 + 46,300) / 2

Average inventory= $41,750

6 0

3 years ago

Berry Corporation has 50,000 shares of $10 par common stock authorized. The following transactions took place during 2012, the f

mojhsa [17]

Answer:

$285,000

Explanation:

Please see attachment

5 0

3 years ago

Norma Smith is the controller of Bramble Corporation and is responsible for the preparation of the year-end financial statements

melisa1 [442]

Answer:

Current liability refers to the short term obligations of the firm which need to be settled down within a period of one year or within a normal operating cycle.

(a) $0 would be reported as current liability, as it is not a current liability. It is a contingent liability.

(b) The amount of current liability is $192,900 because it is a liability of a firm to pay bonuses to the employees.

= $900,000 × 0.08 × (1/12)

= $6,000

Payment of interest on loan is a liability of the firm.

(d) $0 would be indicated in current liability, because provision for doubtful accounts is subtracted from the total accounts receivable to determine the net account receivables.

(e) Proposed dividend is a part of current liability and the amount of dividend to be shown as current liability is as follows:

= Dividend per share × No. of shares outstanding

= $3.50 per share × 41,810

= $146,335

(f) Customer advances is a current liability and the amount of customer advances to be reported in current liability is calculated as follows:

= Customer advances - Amount earned this year

= $193,100 - $57,900

= $135,200

6 0

3 years ago

An external competitor to Construction (from another island) is offering to build the new homes for $1300 each. Here are facts a

cupoosta [38]

Answer:

a. The minimum transfer price (per home) that Construction would be willing to accept would be $1,270

b. The maximum transfer price (per home) Island Evaluations would be willing to accept would be $1,300

Explanation:

a. According to the given data If Construction accepts the proposal of Island Evaluations, then it has to foregone the profits which could have been earned if Construction accepted the proposal of local villagers to build an incline, a bridge and a campground.

Hence, minimum transfer price (per home) for Construction should be such that it covers the profit foregone as given above:

Now, profit foregone is calculated as per the table below:

Figures in $

Particulars Revenue Cost Profit

Incline 1400 600 800

Bridge 1500 950 550

Campground 2700 1200 1500

Total 5600 2750 2850

Therefore, the transfer price should be such which can generate a profit of $2,850 for Construction.

Therefore, total revenue which should be generated = Cost of building five new homes + Profit foregone

= 700*5 + 2850 = $6,350

Hence, minimum transfer price (per home) should be = 6350/5 = $1,270

b. The maximum transfer price (per home) that Island Evaluations will be willing to accept is $1,300 per home as quoted by the external competitor from another island.

4 0

3 years ago